BofA cited branch closures as a backup plan, source says

Bank of America Corp. told the Federal Reserve in June that it could cut branches to preserve capital in an emergency, said a person briefed on the discussions.

That option was among potential responses to a hypothetical crisis in which the Charlotte, N.C., company needed to suddenly raise capital, said the person, who declined to be identified because the plans were private. The company could also issue a separate class of shares tied to its Merrill Lynch division, said the person.

In the months that followed, Bank of America Chief Executive Brian T. Moynihan ramped up efforts to boost capital by selling assets such as a $15-billion stake in China Construction Bank Corp. and exiting non-U.S. credit-card operations. He announced $5 billion in annual savings and 30,000 job cuts as part of the Project New BAC efficiency plan.

The lender has no imminent plans to reduce branches beyond the 750 already targeted for closure, the person said. The bank had 5,715 retail offices as of Sept. 30.

JPMorgan Chase & Co., the biggest U.S. bank by assets, had 5,508 locations at year-end, and Chief Executive Jamie Dimon said Friday that his New York-based company wants more. San Francisco-based Wells Fargo & Co. had 6,265 locations as of Sept. 30.

The closure option was first reported in the Wall Street Journal.

“We have greatly streamlined and simplified the company and significantly improved our capital and liquidity,” Larry DiRita, a Bank of America spokesman, said Friday. “We’re a lot less risky and complex company.”