Bank of America is loosening the reins on its investment bankers.
The lender is sending out dealmakers in search of more middle-sized transactions in the U.S., seeking to regain market share after cutting back on risk. It's hiring at a fast clip to build out its ranks with capital-markets expertise, according to Brian Moynihan, the bank's chairman and chief executive officer.
"We got a little too careful," he said Wednesday in an interview with Bloomberg Television in New York. "We lost some share in mid-size client M&A deals in the United States. We shouldn't do that — and the team saw that, and that's what they're after."
The company's investment-banking fees dropped 18 percent in the third quarter to $1.2 billion, driven primarily by declines in advisory and leveraged finance, it reported in October. The slump followed senior-level departures in 2018's first half, and by midyear, people with knowledge of the situation said some defectors had grown frustrated with the bank's limited risk appetite, believing they could make more money elsewhere.
In September, corporate and investment banking chief Christian Meissner announced that he, too, would step down, to be succeeded by Matthew Koder.
"We switched leadership to start to drive the business deeper in the U.S.," Moynihan said.
Separately, the bank's trading business is unlikely to get a big boost from surging financial-market volatility late this year, the CEO said.
For fixed income, "in late November, we probably thought we'd be up a few percentage points over last year, now we're probably down a few percentage points" this quarter, he said. While equity-trading volumes are have risen, the bank doesn't make as much money on those activities as it does on derivatives and financing, he said.
"Yes the volumes go up, there's not a lot of risk, and there's by definition not a lot of reward," Moynihan said.
