Bank of America hopes to leverage its Merrill Lynch acquisition for greater market share.
One of the bright spots of an otherwise rocky year-plus for Bank of America has been the performance of its “heat of the crisis” Merrill Lynch acquisition of 2008. The subject of lawsuits and investigations and likely culprit of the demise of former BofA CEO Ken Lewis, the Merrill Lynch acquistion is by most accounts working out very well.
And perhaps too well: there has been speculation that struggling BofA was ready to jettison the profitable business in order to save itself. But CEO Brian Moynihan rejected that notion, telling the LA Times in July that BofA was “absolutely not” looking to shed Merrill. “Merrill Lynch is part of Bank of America now,” he told the paper.
reps delivered at a financial industry gathering in Toronto this week. The corporate side of the business is doing very well, they say, adding that the bank’s main challenges (as well as layoffs) are all centered on the consumer and mortgage sides of the business. They noted also that the financial crisis of 2008-’09 was actually a benefit as companies diversified away from their concentrations with other competing banks in the US and Europe.
Bruce Proctor, managing director and head of BofA Merrill Lynch’s global trade & supply chain finance group told International Treasurer that right now what’s top of mind for BofA is continue expanding its business. They plan to do that on the corporate side “by leveraging the Merrill Lynch acquisition.”
“Merrill Lynch is in 140 countries so there is a great opportunity for BofA to bring its universal banking solutions to the Merrill Lynch investment banking footprint,” he said. The bank is taking a very “planned and methodical” approach to this as it hires new people for its growing in global transaction services business (GTS). Global transaction services has been fertile ground for banks, as they scramble to service corporate demands as those companies look for growth abroad. Citi’s GTS unit is one of that bank’s most successful units recently.
BofA is also hiring to boost its relationship management and trade finance business to support companies expanding into distant markets. The bank now has a focus on growing trade finance in Asia and Europe and is also leveraging Merrill’s large presence in Latin America and Southeast Asia, most notably Indonesia, the Philippines and Malaysia, among others.
In terms of product development, Joel Van Dusen, managing director and global head of corporate and investment banking at BofA said that customers are often not specific about what their needs are and that banks need to be flexible in order to meet their demands. In BofA’s view, he said, “customers expect banks to follow them.” He added that clients don’t look at specific products but rather ask “how can you support me in my business in these areas.”
In the current environment where banks are scrambling for as many corporate dollars as they can, this will continue to benefit corporates, in particular treasurers.