Bank of America to lay off 3000 jobs in capital markets as a result of losses stemming from mortgage performance in structured investments

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The jobs will primarily be cut out of their investment banking and capital markets groups in a further sign that the credit contraction has caused a mass reduction in activity in the secondary markets and structured finance arena.

From Market Watch:

Bank of America said late Wednesday that it is cutting roughly 3,000 jobs and launching a strategic review of its investment banking business after recent poor performance from the unit.

Most of the job cuts will be from Bank of America’s investment banking unit, it said. Those reductions represent less than 2% of the company’s staff. Business Lending, Treasury Services and Capital Markets and Advisory Services, as well as supporting infrastructure, will be affected, the bank said.

Bank of America reported a 31% drop in third-quarter profit last week as trading losses and a hit from loans backing leveraged buyouts nearly wiped out the company’s investment-banking income.

We saw a lot of cuts on the origination side, and it only makes sense that this slowdown moves through the structured finance units as well – with fewer loans to package and sell there isn’t the need for so much overhead. Look for more players to make this move in their capital markets groups.