Management Turnover as Change Agent

Thursday, December 17, 2009

BofA's Long Nightmare Maybe Over - Insider Moynihan Gets the Crown

While I have been in the camp pushing for an outside candidate to replace Ken Lewis as Bank of America’s CEO, the board finally has made a decision and went with inside candidate Brian Moynihan. Moynihan, who is currently the president of the bank’s consumer and small business banking, is very familiar with all the working parts of the bank and his ascension should make for a relatively smooth transition, a positive for the selection. Paul Davis of the American Banker wrote,

Brian Moynihan, New BofA CEOMoynihan has maintained a relatively high profile at B of A since joining the $2.39 trillion-asset Charlotte company in 2004 when it bought FleetBoston Financial Corp., where he was a top lieutenant to chairman and CEO Charles Gifford. Many observers said he appeared to be a frontrunner because Gifford and Thomas May, a former Fleet director, were on the committee charged with finding Lewis’ successor.

According to a piece in the Wall Street Journal’s Deal Journal a Citi analyst said,

He is also generally well liked by the investment community, and from our conversations with current and former BAC employees, he is consistently viewed by his peers as a very intelligent and strategic thinker.

Paul Davis wrote a story in today’s American Banker in which he quoted Anthony Polini an analyst for Raymond James Associates. Polini said,

… Choosing Moynihan appears to endorse the business model built over decades by Lewis and predecessor Hugh McColl Jr., including coast-to-coast retail banking and market leading positions in mortgage, credit cards, brokerage and investment banking. Moynihan was picked to run the investment bank in January following the ouster of former Merrill Lynch & Co. CEO John Thain.

“The selection says that while the economy and recession have been lousy, the board still believes that the company model is intact,” Polini said. “It is a vote of confidence for the strategy.”

Moynihan has his work cut out for him. While the bank has managed to recently pay back the government for the TARP related money many difficulties remain. While the government will have to go along with the new choice, it is hard to imagine it was delighted with the board’s choice for an inside candidate. The new selection comes on the heel of the announcement that the vice chairman of Bank of America Merrill Lynch, William J. McDonough would resign.Stay tuned as it all plays out. There are likely to be more changes on the board and within the executive ranks.

No comments: