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Bank of America Moving to Cut Branch Network

July 28, 2009

Bank of America has slowly been letting out details about it’s intention to cut costs and reduce redundancy by closing branches. The closings could amount up to 10% of branches, of which it has some 6100.

It’s unclear which branches would be cut at this junction, but Bank of America owns a large number of its branches. It has been attempting or has sold a number of them in Silicon Valley over the past few years as sale-leasebacks. Citibank also recently moved to sell and lease back branches as part of its effort to raise funds.

Wells Fargo, which acquired Wachovia will likely also announce cuts as it consolidates its real estate portfolio and it also moves to reduce redunant branches.

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I am curious if most of the branches that were owned were attached to the original Bank of America as opposed to Nationsbank. I have not seen many BoA owned branches here in Florida…which doesn’t mean there are any. I just haven’t seen them.

Separately, what kind of Cap rates would a Citibank branch sell for right now? I see a handful at 6.25%. There is no way they will sell for any where near that amount. I am not even sure cap rates are an accurate measure of the value at this point.

Ken Flaspohler July 29, 2009

I have 2 BOA branch offices by me located within a few blocks of each other. I know of 2 other branches within about 2-3 miles. I appreciate the office locations as I bank at BOA but have always wondered the wisdom of the number of branches in one suburban location.

No wonder they are struggling!!

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