Bank of America withdraws record 9% of ATMs to reduce costs
NEW YORK — Bank of America, the lender targeting $8 billion in expense cuts, reduced its automated teller network almost 9 percent this year by yanking most of the devices at U.S. gas stations and malls.
The bank’s total number of ATMs fell by 1,536 in the first half, a record decline, leaving it with 16,220 as of June 30, the Charlotte-based firm said this month. Bank of America, one of the largest financial institutions in the Charleston area, didn’t renew deals to place its machines at sites owned by shopping center owner Simon Property and gas station operator Valero Energy, said Anne Pace, a spokeswoman for the bank.
“When they put an ATM in a mall or gas station, they have to rent that space in the same way that Sunglass Hut has to pay for their space,” said Bart Narter, a banking analyst at Celent. “They did the math and probably concluded that these guys aren’t profitable.”
CEO Brian Moynihan is shrinking the bank’s footprint to focus on his most profitable clients after regulations squeezed fees and he aborted plans to charge debit-card users $5 a month. Moynihan has shuttered 108 branches this year, including a location on the Air Force side of Joint Base Charleston, and he plans at least 30,000 job cuts in a reversal of the expansion led by predecessor Ken Lewis.
Bank of America chose to pull most of its ATMs at malls and gas stations in part because those devices only dispensed cash and weren’t available 24 hours a day, Pace said. Customers want to be able to deposit checks at an ATM, she said.
The move stems from Moynihan’s Project New BAC, an efficiency plan targeting $8 billion in annual expenses by 2015. The number of ATMs shouldn’t change much more, she said.
It costs banks an average of $1,700 per month to run an ATM on someone else’s property, compared with $1,100 at a branch, said Tony Hayes, a partner at consulting firm Oliver Wyman in Boston. The difference stems from rental costs and fees for armored couriers to refill machines with cash, he said. “There are very real expenses to owning and operating ATMs, and since banks don’t charge their own customers to use the machine, the costs are borne entirely by surcharges paid by noncustomers,” Hayes said.
Valero, one of the biggest U.S. refiners, also manages about 1,000 U.S. retail locations mostly in Texas and a few other states, said spokesman Bill Day.
Simon Property had 325 retail locations across 41 states and Puerto Rico as of April, said Les Morris, a spokesman for the Indianapolis-based company. The number of mall ATMs hasn’t changed, he said without specifying who replaced Bank of America.