Bank of America will record a $300 million charge in the second quarter to cover the elimination of three data centers, and it will also book $125 million in severance costs tied to broader cost-cutting efforts, Chairman and CEO Brian Moynihan said Wednesday.
The Charlotte, N.C., company will sell or close the three data centers, Moynihan said at the Sanford C. Bernstein & Co. Strategic Decisions Conference. B of A disclosed its plans for those data centers during an April 18 conference call but had not announced the size of the charge until Wednesday.
B of A warned investors early about unusually large severance costs and tech-related cuts that will occur in the current quarter. Since the call in April, B of A has accelerated the timetable for closing the data centers “to reduce future operating costs,” Jerry Dubrowski, a company spokesman, said after Moynihan's talk. The company did not share its new deadline.
B of A has been gradually reducing its overall budget for information-technology infrastructure, such as networks, servers and storage, and has increased its use of software-defined infrastructure to save money.
Separately, B of A will record the $125 million of severance costs as it continues to reduce headcount throughout the company, Moynihan said. The severance costs are not related to the data-center closings and are primarily tied to the termination of higher-salaried managers.
B of A typically absorbs severance costs, but the company is disclosing the costs for the second quarter because they are higher than normal, Dubrowski said.
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