Bank of America is to axe 3,000 jobs mostly from its corporate and investment banking operation. The cuts are the deepest so far on Wall Street, hit by fallout from the US subprime mortgage market which triggered a credit crunch three months ago.

Gene Taylor, head of the 20,000-strong global corporate and investment banking operation, is to go and will be replaced by Brian Moynihan, head of wealth management.

Chief executive Kenneth Lewis blamed the losses mostly on the bank's own mistakes.

Jefferson Harralson, an analyst in Atlanta at KBW told Bloomberg: “These cuts are higher than what I was anticipating. Ken Lewis was clearly disappointed by the performance and the bank's risk management. He is moving quickly to boost earnings for next year.''

Mr Lewis said in the statement: “While some of these changes are a direct result of our underperformance, others have been contemplated for a number of months as we looked at how we could operate more effectively,''

Investment bankinig profits fell 94 per cent to $100 million in the third quarter after it suffered a $607 million trading loss, $247 million of writedowns on leveraged buyout loans and a $527 million loss on structured products such as mortgage-backed securities. The bank was forced to increase the amount set aside to cover bad loans by 73 per cent to $2.03 billion.

Mr Taylor’s aim had been to raise corporate and investment banking profit by 70 per cent and revenue by 50 per cent over the next five years with the ultimate goal being a top-three share of investment banking in the US.

Mr Lewis, who had hinted at job cuts last week during his earnings conference call with analysts is now reversing this strategy.

"I've had all of the fun I can stand in investment banking at the moment," Lewis said last Thursday. "So to get bigger in it is not something I really want to do."

In the third quarter, Bank of America said that its group net income declined to $3.7 billion, or 82 cents per share, from $5.42 billion, or $1.18 per share, a year ago, and revenue fell 12 per cent to $16.3 billion.

The next day, Chris Hentemann left as head of global structured products, which had reported a net revenue loss of $527 million.

Mr Taylor will retire after a 38-year career with the company. Mr Moynihan, who ran the company's Global Wealth and Investment Management business, will be replaced by Keith Banks, who runs the Columbia Management mutual funds arm, which is part of Bank of America's asset management organisation. No replacement as yet been named for Mr Banks.

Yesterday Merrill Lynch revealed a $7.9 billion write-down on mortgage-backed securities, Bank of America announced a strategic review as profits plunged by 93 per cent in its investment banking unit in the third quarter.

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