BofA’s Moynihan: Do it for Ken
New CEO promises to fulfill Lewis’s vision and make Bank of America-Merrill Lynch a global leader.
Brian Moynihan is a team player. As Bank of America Corp. has struggled over the past year with massive losses from its acquisition of Merrill Lynch & Co. and management turmoil, Moynihan has stepped up to fill a series of key positions for CEO Kenneth Lewis, serving as head of corporate and investment banking, general counsel, and finally taking charge of retail banking. “I always thought of myself as a person trying to do what the company needs me to do,” Moynihan told Institutional Investor in a recent interview.
Bank of America needs Moynihan more than ever now. Its board of directors capped a hurried search process late Wednesday and named the 50-year-old banker as the man to succeed Lewis as chief executive in January. In his first act, Moynihan appeared before several hundred employees at a town hall meeting at BofA’s Charlotte, North Carolina-headquarters on Thursday and sought to rally his troops, saying it was time to get the banking juggernaut that Lewis had assembled working together. “When we come out in 2010, it’s now just about execution,” he said.
BofA’s stock price slipped 33 cents on Thursday, to $14.95 a share, but some analysts welcomed the choice of CEO. “Moynihan was our top pick,” said Anthony Polini, a banking analyst with Raymond James Associates in New York. “If you think they have a working business model, he would be the perfect guy. An internal candidate was clearly the best path. It’s great news for BofA.”
In the last seven years, BofA has forked over more than $120 billion buying everything from Merrill to credit card firm MBNA Corp. and mortgage lender Countrywide Financial Corp. Moynihan came to the bank via the 2004 acquisition of FleetBoston Financial, where he had been head of wealth and investment management.
The Merrill purchase has been by far the most momentous of those deals. BofA acquired the investment bank at the height of the financial crisis in September 2008, only to have Merrill’s mounting losses force the bank to seek $45 billion in bailout funds from the U.S. Treasury’s Troubled Asset Relief Program. The Securities and Exchange Commission and the New York State attorney general are investigating allegations that the bank failed to disclose those losses to shareholders before they approved the deal. The bank has denied misleading shareholders, but the controversy contributed to Lewis’s decision to step down.
Merrill has led a big turnaround in profits at BofA so far this year, though, and Moynihan told staff that the bank now enjoyed an enviable position in “every relevant product division, every relevant customer base, every geography around the world.” There’s “not a market we can’t transact in, not a place we can’t find capital,” he added.
Maintaining a team spirit, this time as coach, is arguably Moynihan’s biggest task now. That includes keeping Tom Montag, head of investment banking and corporate banking, and Sallie Krawcheck, head of wealth management, on board and integrating Merrill’s operations with BofA’s retail and commercial banking activities.
Moynihan also needs to fix the bank’s credit card and consumer lending business. BofA has charged off more than $14 billion in card loans as uncollectible this year, and reported credit-card write-offs at an annual rate of 13 percent last month, down from 14.25 percent in September, but higher than comparable rates at American Express Co., JPMorgan Chase or Citigroup.
BofA’s board spent two months searching for a CEO and tapped Moynihan after Bob Kelly, CEO of Bank of New York Mellon Corp., turned down the post earlier this week.
Lewis lauded Moynihan as a smart and capable successor at the town hall meeting. “Another unique characteristic about him is he wanted the job,” he said, adding with a touch of wry humor, “That may end up in the category of ‘Be careful what you wish for.’”
Moynihan said his goal would be to fulfill Lewis’s vision of making BofA the most admired company in the world. “Ken spent ten years getting us there. We have an obligation to fulfill that mission for Ken.”