Bank of America - Merrill Lynch Merger

[Urbanity]

In other BOA news, Is anybody else getting sick of Cuomo using the bank as a platform for his Governor's run?

Cuomo files civil charges against Lewis, Price, Bank of America

[kermit]

The Wall Street Journal reported on the new CFO hire this morning. The headline said "BofA hires an Outsider for CFO Posistion" Towards the end of the article was this statement:

Mr. Moynihan's search for a new CFO has been watched closely for clues about the new chief executive's thinking and his preference for Charlotte or New York as the company's center of gravity. People familiar with the matter said Mr. Noski will work out of the Charlotte headquarters and is likely to move his family there from Los Angeles.

http://online.wsj.com/article/SB10001424052702304604204575182522702168334.html?mod=WSJ_hps_LEFTWhatsNews

FWIW

[kermit]

A refreshingly substantive article in the NYT today discussing the possibility of BoA putting its Countrywide subsidiary into bankruptcy. This would presumably free BoA from the majority of its mortgage-related liabilities.

http://dealbook.nytimes.com/2011/08/11/for-bank-of-america-countrywide-bankruptcy-is-still-an-option/

[HopHead]

If BofA can somehow shed Countrywide, as is mentioned in this article, it would resolve 90% of their problems. I still find it laughable that AIG is able to sue anyone. If anything, the judge should look at those cases, shake his or her head and say "next".

[kermit]

The WSJ is reporting that 10,000 layoffs are coming at BoA. The first 3,500 coming this quarter sound like they will be primarily in investment banking. Later layoffs are likely to be worse for Charlotte:

"The elimination of thousands of additional positions will initially hit consumer banking and mortgage operations, as well as legal, marketing and human resources."

http://online.wsj.com/article/SB10001424053111904070604576516813395283964.html?mod=WSJ_hp_LEFTTopStories#articleTabs%3Darticle

If I were a betting man I would not put any money on a local housing recovery...

[kermit]

In a mostly irrelevant blast from the past the WSJ is reporting that Bob Kelly (one of the finalists to replace Ken Lewis) has resigned as Chairman and CEO of BNY Mellon.

[SmellyCat]

50% BNY Mellon stock price erosion on his watch and a $33mm exiting pay package....nice job, Bob!!! Right up there with Stan O'Neal at Merrill. You should be proud.

[kermit]

While I certainly don't want to become the pessimistic guy I can't help but be alarmed at BoA's latest cost cutting pronouncements.

$5 billion in cuts beginning next month

Surely this plan will impact local employment. I guess the question is how much will it hurt local HQ employment? Does anyone with insight care to speculate? I could imagine cuts ranging from best case of 10% or so HQ downsize (1,500 high wage folks) all the way to the first steps in moving the Charlotte executive operations elsewhere (although I have a hard time seeing that since Charlotte is likely the lowest cost spot to maintain those activities).

This is particularly frustrating since it appears (to this uninformed observer) that BoA businesses are going pretty well with the MAJOR exception of Countrywide.

EDIT: Alternatively does anyone see a scenario where some Merrill (or other) activities were moved to CLT in an effort to lower costs? (I have a hard time seeing much of that occur but what do I know)

[HopHead]

^I would have a hard time imagining how BofA could justify moving high paying exec jobs out of CLT to NYC as a way of "cost cutting". We all know the cost of doing business down here is substantially lower than NY. If they are truly trying to cut costs they will be trimming more jobs elsewhere than here. Perhaps moving some positions here. However, common sense doesn't always prevail. That all being said, cutting 30,000 jobs company wide isn't good news locally regardless. Some things will be on the chopping block.

[kermit]

Reinforcing my fears about local BoA cuts, the WSJ published this today:

Merrill Lynch Largely Should Evade BofA Knife

[HopHead]

^I was up in NYC last week and had dinner with some friends, one of whom works on the IB side at BofA. We know BofA has moved most of those jobs to Manhattan over the years. He was actually telling me that they have axed a large number of those jobs they moved to NYC from Charlotte, we're talking well over 15% this year alone. He pretty much resigned to the fact that he's going to need to find another job, likely not with BofA, because his position won't exist at this time next year. While Charlotte won't dodge the knife on the job cuts, there are a lot more cuts going on in NYC than most people realize.

[SmellyCat]

Very true. All the traders and salespeople were shipped to NYC years ago, so that bird has already flown town.

I don't know how many people fully realize this, but that enormous trading floor that Ken Lewis built in the Hearst Tower is now filled with middle and back office BofA employees. Needless to say, that's pretty expensive upfit to house back/middle office peeps!! Nice work, Ken, wherever you are.

[kermit]

So this was interesting:

The [bAC CEO search] committee even agreed to [Robert] Kelly's demand that BofA move its headquarters from Charlotte to New York City, where Kelly owns a sumptuous townhouse.

http://money.cnn.com...rtune/index.htm

The business journal discusses the article here:

http://www.bizjourna...du_pub&page=all

[cltbwimob]

So this was interesting:

http://money.cnn.com...rtune/index.htm

The business journal discusses the article here:

http://www.bizjourna...du_pub&page=all

Absolutely glad this did not happen.

[ssh214]

^^^ Wow that really would have been devastating for Charlotte, that is all I can I say...

[HopHead]

I thought I remember hearing about that a while back. Can you imagine the backlash against BofA if this went through? Sounds like Obama and his crew were influential though it was more about his outrageous compensation demands than anything else.

[kermit]

BofA has seen some board turnover recently. The shifts are neither unexpected or radical however they suggest that the bank is continuing its shift away from Charlotte:

 

 

But Chief Executive Brian Moynihan and Chairman Charles O. Holliday Jr. more than a year ago began planning to reshape the board, said people briefed on the plans. The company sought directors with operational and global experience, especially as it seeks to expand services internationally to U.S.-based clients.

 

http://online.wsj.com/article/SB10001424127887324110404578626333225162410.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Charlotte is a great place to operate a national-scale retail bank. Its a pretty crappy place to operate a globally focused bank.

 

briefer Observer version here: http://obsbankwatch.blogspot.com/2013/07/bank-of-america-adds-directors.html

[kermit]

The WSJ on the latest executive reshuffling at BoA (spoiler alert, its not great news for Charlotte)

 

 

Mr. Darnell's move also represents the continued whittling away of decision-making authority in the bank's headquarters city. Mr. Darnell, 61, is among the bank's top executives in Charlotte and among the most senior officials who were at Bank of America before its 2004 purchase of FleetBoston Financial Corp.—then the employer of Mr. Moynihan.

 

http://online.wsj.com/articles/thomas-montag-to-become-sole-coo-of-bank-of-america-1408456736?mod=WSJ_hp_LEFTWhatsNewsCollection

[Norm2]

The WSJ on the latest executive reshuffling at BoA (spoiler alert, its not great news for Charlotte)

 

 

http://online.wsj.com/articles/thomas-montag-to-become-sole-coo-of-bank-of-america-1408456736?mod=WSJ_hp_LEFTWhatsNewsCollection

Bank of America will eventually leave Charlotte. It is only a matter of time unfortunately.

[CLTProductions]

Bank of America will eventually leave Charlotte. It is only a matter of time unfortunately.

nooo

[HopHead]

Bank of America will eventually leave Charlotte. It is only a matter of time unfortunately.

 

Then the NY AG will stop constantly suing them... Maybe.

 

BofA has been a Charlotte-based bank run by New Yorkers and Bostonians for years now... They may officially call here home, but all the decisions are made in midtown Manhattan. I used to be a big proponent of them and was an account holder for years but quite honestly got tired of their arrogance and lack of customer service, especially once they bought Merrill Lynch. Wouldn't be surprised if NYC is one day their HQ with the old guard disappearing.

[kermit]

on the other hand...

 

 

Wells Fargo WFC +0.34% & Co. aims to double the size of its asset-management unit to $1 trillion over the next decade through acquisitions and more aggressive sales to big investors, according to executives carrying out the plan.

 

http://online.wsj.com/articles/wells-fargo-seeks-to-boost-asset-management-business-1408467026?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Although I don't know how much (if any) of Wells' asset management (AKA mutual fund operations) is handled here.

[cltbwimob]

^^^I thought most of those business lines were based in Charlotte due to the Wachovia acquisition, but I could be wrong.

As for Bank of America, don't panic just yet. Yes, Charlotte just got a little weaker within the power structure of the bank, however I think the circumstances surrounding this move are fairly benign. If Darnell would have been fired and a new C-level executive would have appeared in NY, I would be very worried, however it seems as if this was Darnell's personal decision and not a calculated strategic move by Moynihan to shift power to the Northeast. A Charlotte banker was promoted to the executive management team as a result, so Charlotte still maintains the same number of direct reports to the CEO as before. The biggest concern I have in all this hubbub is the continued elevation of Thomas Montag within the bank's power structure. He seems like a NY banker through and through and I would be very worried if he became CEO. Fortunately, at 57 or 58, he is older than Moynihan by several years, so he will be the first reach age 65 which I believe is the mandatory executive retirement age. In other words, if Moynihan doesn't opt for early retirement, Montag should retire during Moynihan's tenure as CEO.

[atlrvr]

^^^  Agree with cltbwimob on all points.  Also, a lot of regulations are making it really really expensive to earn revenue trading.  It's not inconceivable to see Merrill Lynch spun off, or at least the Investment Bank at some point (with BofA keeping Wealth Management). 

 

Wells Asset Manament is spread all over (Charlotte, S.F., suburban Milwaukee, and probably the largest in Boston).