Bank of America plans to hire as many as 50 senior dealmakers to revitalise its stuttering investment bank only weeks after overhauling the unit’s leadership in response to a slide in fees.
Brian Moynihan, chief executive, has authorised newly appointed corporate and investment banking head Matthew Koder to recruit up to 50 managing directors, and a number of mid-level staff to support them, according to two people familiar with the plan.
Mr Koder — an intense Australian whose CV includes stints at UBS and Goldman Sachs — was due to take over in January from his ousted predecessor Christian Meissner.
But he has already taken the reins, according to an insider. He has already told staff they have adequate resources to win market share, said people who attended his first presentation. He also said they should not use the bank’s reduced appetite for risky deals as an excuse.
The recruitment drive demonstrates the new-found urgency felt by BofA’s top executives to galvanise the investment bank, which has fallen behind smaller Wall Street rivals in the US during a surge in activity this year. Fees at BofA’s investment banking division dropped 18 per cent in the third quarter.
The unit’s problems are most in acute in the US, where it has fallen from fourth to seventh in 2018 league table rankings for deal activity. That decline has put the bank below smaller competitors, such as Barclays and Jefferies.
Mr Moynihan, who had previously delegated oversight of the unit to other executives, paid an unexpected visit to an off-site for CIB managing directors late last month alongside chief operating officer Tom Montag. Both men emphasised the importance of the advisory and capital markets businesses, pledging their personal support in an attempt to boost morale, people present at the event said.
“We continuously seek out the very best to complement our own talent,” BofA said in a statement about the recruitment plans.
BofA’s dealmakers have had a tumultuous time of late. In addition to the league table plunge, they were ordered to rein in risk and subjected to a board-level review after making a $292m loss on loans made to South African retailer Steinhoff and its billionaire chairman Christo Weise, whose company has been engulfed in a corruption scandal.
Both were factors in the ousting of eight-year incumbent Mr Meissner, who will leave the bank in January after being replaced by Mr Koder. The Australian fitness fanatic, who previously ran BofA’s Asia-Pacific operations, has already made an impression on his new subordinates.
At the investment bank’s annual off-site last month Mr Koder gave a long, forensic presentation, highlighting the multitude of business areas in which BofA was losing ground to rival JPMorgan, according to people present. He said the investment banking fee gap between BofA and market leader JPMorgan has widened to $2.5bn so far this year, from $1.4bn in 2016.
Mr Koder told managers he wants to see them win more deals under $5bn and squeeze more fees from them. He also argued the drop in performance cannot be blamed on a lack of risk appetite or decreased use of the bank’s balance sheet as BofA has extended more credit and other services than JPMorgan and smaller rivals like Jefferies and Barclays, the people said.
Another surprise speaker at the off-site was investment banking head Diego De Giorgi, who was not originally scheduled to present at the event, the Financial Times reported last month. He was added back to the program after some insiders started speculating Mr De Giorgi may change roles or leave due to his close relationship with Mr Meissner and culpability for the drop in M&A revenue.
BofA has been wrestling with the scale and role of its investment bank in the decade since it acquired Wall Street broking powerhouse Merrill Lynch. Its earnings are still driven by its core Main Street business of lending to US corporates and consumers.