Ongoing job cuts at Bank of America and Wells Fargo are putting pressure on the city of Charlotte’s pristine credit rating, according to a report Monday from Moody’s Investors Service.
Citing the large percentage of Charlotte’s workforce employed by its two big banks, the ratings agency said the city would need to continue “extreme fiscal discipline” to keep stable as cuts progress.
Charlotte has had a perfect credit rating for 37 years, according to the city’s finance department. It has a Aaa rating from Moody’s and a AAA rating from both Standard & Poor’s Ratings Services and Fitch Ratings. Better credit ratings allow cities to borrow money more cheaply.
Moody’s said Monday that it did not consider the bank cuts to be threatening enough to put the city’s rating under review, but that the ratings agency would continue to monitor the situation.
Last fall, Bank of America announced that it would shed about 30,000 jobs across the company while trying to save $5 billion in annual costs, part of a cost-cutting program it called Project New BAC, after its ticker symbol.
In its earnings report last week, Bank of America upped the target by $3 billion in a second phase of the program but did not say how many job cuts that would entail.
But the bank did disclose that it has 12,000 fewer employees companywide than last year. Outside of its troubled mortgage division, where the bank has added staff to comply with legal settlements over its mortgage servicing practices, Bank of America has cut 20,000 jobs, Chief Financial Officer Bruce Thompson said.
The bank did not break out how many of those cuts have been in Charlotte. The bank employs about 15,000 total in the city.
At the same time, Wells Fargo has also been trying to cut costs as well, but has not given a figure for how many job cuts that would entail. In its earnings report earlier this month, the bank reported having 2,000 fewer employees across the company from last year.
Wells has about 20,500 employees in Charlotte, and the bank has said that figure should not change significantly.
In the report, Moody’s noted that Bank of America and Wells Fargo made up about 9 percent of the city’s employment. Together, the banks also own $2.7 billion worth of property, or about 3.5 percent of the city’s tax base.
Charlotte’s finance and insurance sector shed about 9 percent of its total jobs between 2008 and 2010, the report states. More job losses would eat at the city’s sales tax revenue and pressure property tax revenue.
Outside of its heavy reliance on the financial industry, Moody’s said Charlotte has a “strong credit profile,” citing the city’s population growth, household income and sound management.
The city’s finance department did not immediately comment on the Moody’s report.