BofA seeks to strengthen M&A arm
With a promotion from co-head to sole head of Bank of America With a promotion from co-head to sole head of Bank of America BAC's corporate and investment banking unit in January, the year had started well for Christian Meissner. But by the spring, things had turned sour as his most prominent dealmaker Andrea Orcel left to join UBS.
With a promotion from co-head to sole head of Bank of America BAC's corporate and investment banking unit in January, the year had started well for Christian Meissner. But by the spring, things had turned sour as his most prominent dealmaker Andrea Orcel left to join UBS.
With the bank's head of Europe, Jonathan Moulds, retiring and some of Mr Orcel's regional lieutenants following him to Switzerland, BofA's European mergers and acquisitions franchise was in urgent need of some rebuilding.
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The departures resurrected memories of how the Charlotte-based bank has suffered from an exodus of former Merrill Lynch dealmakers after its takeover of the investment bank in 2008. It laid bare the mismatch between the bank's strong position in capital markets and its persistent weakness in M&A advice.
In the first eight and a half months of the year, the second-largest US bank by assets ranks sixth globally in M&A advice when measured by fees for completed deals, according to data by ThomsonReuters.
"We are number two in all investment banking fees globally and we are leading in financing areas. In M&A we are not yet, so we are focused on rectifying that," Mr Meissner told the Financial Times.
After Mr Orcel's departure, the Austrian-born Mr Meissner moved quickly to shore up the team. Within a few months, he hired seasoned banker Alex Wilmot-Sitwell from UBS to replace Mr Moulds and he brought in dealmaker Diego De Giorgi from Goldman Sachs, who will start early next year as co-head of European corporate and investment banking.
Mr Meissner, who moved with his family to New York this summer but still spends about half his time in London, can concentrate on Bank of America's formidable challenge in corporate finance: its weak position in M&A advice.
"We intend to grow this into a top three business and we have the people, platform and capabilities to do so," the 43-year-old banker says.
After the recent shake-up of the European business, he says that "we now have the right people. But M&A is a long-term relationship game and it takes three to five years to build that."
Even in its home market, the bank only ranks sixth in what is the most publicly exposed part of investment banking.
Analysts say it will be difficult for the bank to break into the leading pack of banks such as Goldman and Morgan Stanley that have always seen M&A advice as core to their business models.
But Mr Meissner, who joined fromNomura in 2010, two years after the Japanese bank had taken over defunct Lehman Brothers' European and Asian operations with multi-year guaranteed bonuses for its key staff, is taking comfort from recent successes in other business areas.
The bank has been "building capabilities that we did not have in the past", he says. "One example is corporate equity derivatives, where we have expanded rapidly this year.
"We now believe we have the top three or so business in corporate equity derivatives in Europe whereas we used to be nowhere."
The push into M&A comes at a time when the US bank has a long way to go to sort out past mistakes such as its disastrous purchase of mortgage lender Countrywide Financial. The bank announced last year it aimed to cut 30,000 jobs in a cost-slashing exercise dubbed "New BAC" in reference to its stock market ticker symbol.
However, Mr Meissner says BofA's corporate and investment banking franchise, which employs about 6,000 people globally, is geared for growth, even amid a current dearth of deals. "We have been investing and building up constantly during the financial crisis."
People close to Mr Meissner suggest that Mr Orcel's departure - somewhat counterintuitively - enabled the former Goldman and Lehman banker to further improve BofA's M&A business.
They say the bank will make more money with mandates from Santander - one of Mr Orcel's key clients - than in the year before.
It will also do business with BBVA, the Spanish bank's domestic rival - a door that had been shut for many years given Mr Orcel's close association with Santander.