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,

Moynihan 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.

Recommended Reading - Who can fill the CEO seat?, Boston Globe

Todd Wallack, a reporter for The Boston Globe, wrote a terrific piece that appeared this morning on the search for a new CEO for Bank of America to replace Ken Lewis upon his retirement. Wallack examines the pressure to look for a candidate from outside the bank. He also mentions a long list of potential candidates from within the bank and outside. While much of this is a repeat of what has already been discussed their are some real nuggets of information in the piece. If you are interested in BofA, the story is a must read.

CEO Watch Ken Lewis, Bank of America, Update #8

It's official, Ken Lewis, Bank of America's embattled CEO announced his planned resignation for the end of the year. Lewis in a letter to Bank of America employees explained his reasons for resigning. The letter included in the WSJ's Deal Journal stated that Lewis' decision to resign was his alone and that he was not pressured to do so. Whatever the reason, his planned exit is the end of a sad chapter at the bank and hopefully the beginning of a new era for the bank, an unlilkely scenario at this point.

CEO Watch List - Ken Lewis, Bank of America Update #7

Ken Lewis’ CEO chair at Bank of America continues to get hotter and hotter. It is getting more and more difficult to see how Lewis can manage to keep his position much longer. Joe Bel wrote a piece for MarketWatch Tuesday in which he stated,

The multiple probes bearing down on Bank of America Corp. could make it difficult for Chief Executive Ken Lewis to keep his job.

Numerous analysts and management experts are now predicting the when rather than the whether. Stay tuned.

Is BofA's Lewis Getting to the end Game?

Ken Lewis, Bank of America’s embattled CEO, continues to oversee more executive management changes. Over the last few days a number of major management changes have been announced. In response to the growing number of top management changes speculation continues to grow that a potential successor is being developed for Lewis’ job. According to a story by David Mildenberg for Bloomberg,

Bank of America Corp., under pressure to overhaul management and reduce risk, set up a five-person competition to replace Kenneth Lewis as chief executive officer.

The bank yesterday shuffled senior management… Liam McGee, who headed consumer banking, left and was replaced by Brian Moynihan in a division that has provided most of the Charlotte, North Carolina-based bank’s revenue and profit.

Moynihan, 49, who ran wealth management and corporate and investment banking, is the top CEO candidate, according to analysts including Richard Bove of Rochdale Securities. Possible successors include ex-Citigroup Inc. executive Sallie Krawcheck, hired yesterday to head wealth management, home-lending chief Barbara Desoer and Chief Financial Officer Joe Price. Also in the running is Tom Montag, a Goldman Sachs Group Inc. veteran.

The speculation on who may take Lewis’ place is just that — speculation -- but it is very likely he is getting close to the end. Keep a close eye on the top players and what next steps take place.

For more:

Financial Planning

Boston.com

CNNMoney.com

Time.com

Recommended reading - Who could replace BofA's Ken Lewis?, Deal.com Dealscape

Dealscape today ran a piece about an IDD story on what Bank of America might do should Ken Lewis get the ax. The crus of the matter is the bak would turn to its Board of new members for Lewis’s replacement. According to the story,

IDD Magazine is reporting that BofA has a “Plan B” if the board decides to ditch CEO Kenneth Lewis. That Plan B, unsurprisingly, is to replace Lewis with one of the bank’s new board members, all of whom have banking experience.

Even a cat only has nine lives, we will just have to wait and see.

Recommended Reading - Can BofA CEO Ken Lewis Keep His Job? Business Week

Dean Foust of Businessweek wrote a story abut the continuing pressure on Ken Lewis, the CEO of Bank of America. For more than a year Liberum has placed Ken Lewis on our CEO Watch. Foust’s piece is a good analysis of where Lewis stands and what might hapen going forward. Check it out.

CEO Watch - Ken Lewis, Bank of America, Update #6

Ken Lewis lost his battle today to continue as both CEO and chairman of Bank of America. Shareholders voted to rest the chairmanship away from Lewis. Lewis has been under a cloud ever since the Bank of America acquisition of Merrill Lynch and in some people's minds since the bank's acquisition of Countrywide the mortgage company. The real question many people are asking is whether or not Lewis will continue as the bank's CEO much longer. According to a story by Louise Story for The New York Times,

... the vote to separate the chairmanship from the company’s executive leadership raised questions about how much longer Mr. Lewis could steer the bank as shareholder anger mounts over his handling of the bank’s takeover of Merrill Lynch.

Mr. Lewis has worked at the bank and its predecessors for 40 years and run it as chief executive since 2001.

It is very unlikely this is the end of the story. The bank replaced Lewis as Chairman with Walter E. Massey, a longtime board member and former president of Morehouse College.

For more:

SEIU blog
Economic Times
Wall Street Journal
Huffington Post
Financial Times
Los Angeles Times

CEO Watch - Ken Lewis, Bank of America, Update #4

The ratchet continues to turn a notch on Bank of America CEO, Ken Lewis. According to an analysis by Elinor Comley of Reuters,

The government may now add to the pressure from shareholders, analysts said. The sudden departure of Wagoner after nine years in the top job at GM signals the Obama administration is looking for management changes at bailed-out companies.

“His longevity in the job is probably very much in question,” said Keith Wirtz, chief investment officer of Fifth Third Asset Management and a former CIO at a Bank of America subsidiary. Fifth Third holds shares in the bank.

The bank disagreed with the assessment. “We do not see the parallel with the U.S. auto industry,” said a Bank of America spokesman, noting that since 1991 the bank has been profitable in every quarter except one, and made a $4 billion profit in 2008.

Still, shareholders say Lewis is in a precarious situation, citing both the government bailout as well as the fourth-quarter losses at Merrill, which suggest Bank of America did not perform adequate due diligence.

Lewis’ time as CEO of Bank of America may finally be coming to an end. As the pressure continues to grow, Lewis and the board will find it more and more difficult to justify his position as CEO. Keep a close eye on B of A.

For more:

The Plum Line

The Washington Post

CEO Watch - Ken Lewis, Bank of America, Update #3

Henry Blodget wrote a piece for Clusterstock today that questions (as I have been doing for quite some time) why Ken Lewis continues to remain as the CEO of Bank of America. Blodget stated,

Ken Lewis may be an excellent banker. He may be the pillar of his community. He may be a kind, considerate, and fair boss who is admired by his troops. He may, generally, be a real asset to his company.

But Ken Lewis just screwed up. Massively.

Ken Lewis screwed up so massively that he single-handedly demolished at least half of the value his shareholders’ spent decades accumulating–through a knee-jerk decision to buy the sinking super-tanker known as Merrill Lynch. Six months ago, in one tense weekend, Ken Lewis let himself get duped into thinking that if he didn’t bid now and bid high for an imploding Merrill Lynch, he’d lose the prize he’d had his eyes on for years.

Lewis continues to have the “confidence” of his board which seems to defy reality. He continues to try and redeem himself in the eyes of the public. Today, before meeting with President Obama, he was quoted by Bloomberg making what appears to be a valuable suggestion. Lewis stated,

… the U.S. should consider separating commercial lenders from investment banking activities.

While he is probably correct his suggestion is not enough to give him a pass on the damaged he overseen to BofA. Stay tuned.

CEO Watch - Ken Lewis, Bank of America, Update 2

Ken Lewis, Bank of America’s BAC (NYSE) embattled CEO, found himself today under added new pressure.  CTW Investment Group which works with Union-affiliated pension funds just wrote a letter to the bank calling for Lewis’ ouster.  The text of the letter appeared in today’s Charlotte Business Observer.  CTW has often been a thorn in the back of top executives perceived as failing in their executive duties.  According to a Reuters story CTW said,

if Lewis is not removed, shareholders should vote against the reelection of Lewis, Sloan and corporate governance committee chair Thomas Ryan to the board. Ryan is chief executive of CVS Caremark Corp (CVS.N).

Bank of America’s annual meeting is scheduled for April 29…

The real question remains what could a replacement for Lewis do at this point?  Stay tuned.  

For more:  

Charlotte Business Journal   

Forbes 

Portfolio.com  

CEO Watch - Ken Lewis, Bank of America, Update 1

Ken Lewis, Bank of America’s embattled CEO, is not out of the woods yet.  While Lewis managed the other day to get the support of the bank’s board, today’s New York Post in an article by James Doran stated,

A group of angry Bank of America shareholders plans to demand that Chairman and Chief Executive Officer Ken Lewis get the boot at the bank’s upcoming annual meeting. 

Whether the shareholder suit referred to in the NY Post story or other related outside pressures will ultimately result in Lewis’ head only time will tell.  At a minimum, expect far more turmoil as to Lewis’ tenure and management approach.  

For more:  

Clusterstock  

CEO Watch - Ken Lewis, Bank of America

Ken Lewis, BofA's embattled CEO who was responsible for BofA's questionable acquisitions of Countrywide and Merrill Lynch is expected to survive today's BofA board of directors meeting.  According to the Wall Street Journal,

"Lewis's job is in no danger," a person close to the board said Friday.

Whether he survives or not Lewis will remain on the hot seat for some time.  While both major acquisitions were favored by the government, at a minimum Lewis has failed to manage them and deserves to be forced out.  Rob Cox and Anthony Currie of Breakingviews.com yesterday, which appeared in the New York Times, summed up Lewis' predicament and concluded,

Corporate executives must accept responsibility for failures if they’re to keep their shareholders’ trust. When they don’t, it is up to the board to make sure blame is apportioned appropriately. Lewis hasn’t come clean. BofA’s board must go.

I agree but suspect the prevailing view that Lewis will for now remain at his post are accurate. Stay tuned.  

For more:  

New York Times  

Bank Investment Consultant  

Bizjournals.com  

Bloomberg  

AP  

NY Post  

Charlotte Observer  

Clusterstock  

Forbes (update)  

Guardian UK (update 1/29)  

Charlotte Observer (update 1/29)  

BofA CEO Stays Above the Fray of Falling Earnings

Unlike CitiGroup, Bank of America's latest drop in earnings (32%) does not translate into job risk for the bank's CEO, Ken Lewis. In a piece by Ben White in today's Financial Times Lewis is quoted during yesterday's conference call indicating there will be changes at the bank (jobs and management responsibilities).

Ken Lewis, chief executive, said he would review every business that led to the dismal third quarter performance, which was much worse than analysts expected.

“What I can’t say is that we will stay the course and go forward as we have in the past,” he said. “The probability of changes and elimination of some businesses and infrastructure reassessment is very high.”

In a piece by David Mildenberg on Bloomberg he stated that during yesterday's conference call Lewis said

... the company plans to scale back its investment banking unit after trading mistakes led to $717 million of losses.

Keep an close eye on what Lewis and top management do to address the earning problems facing the bank. Unlike Prince, Lewis has been a master until now at managing BofA.

For more see:

Independent UK
DealBook
Reuters
SeekingAlpha
Times Online UK