Executives at Bank of America Corp. say they hope their yearlong push to establish an equity sales and trading operation in Europe will lead to a major investment banking presence there.
The Charlotte, N.C., banking company has hired 100 people for its London-based Bank of America International Ltd., the European counterpart to its San Francisco-based investment banking unit, Banc of America Securities.
Bank of Americas push into Europe comes as some of the larger U.S. investment banking companies look across the Atlantic for ways to increase their capital markets business while market volatility affects the deal calendar here.
Bear Stearns Cos., Morgan Stanley Dean Witter & Co., and Lehman Brothers all spoke about their growth plans in Europe even as they reported first-quarter earnings that were sharply lower than a year earlier, thanks to the rout in the U.S. capital markets. Bear Stearns in particular has been staffing up in recent weeks in Europe.
Bank of America has hired equities analysts, traders, and salespeople, as well as a handful of investment bankers. Last fall it hired a group of analysts from Donaldson, Lufkin & Jenrette Inc. after the firm was acquired by Credit Suisse Group.
On Wednesday the banking company picked a leader for its sales team by naming former Credit Suisse First Boston executive Simon Winfield as head of Pan-European equity sales.
Mr. Winfield will head a team of 20 to 25 salespeople and will pitch Bank of Americas services to institutional investors in the region.
The London operation began in 1999 as an extension of Bank of America Securities U.S. equity sales and trading operations, but expanded to include European stocks with the addition of the London-based equity research operation.
Bank of Americas European expansion has come during a period of global market uncertainty, and many investment banking firms are cutting back. And the company is competing with other major investment banking firms with more established operations on the Continent.
But Stephen Kendall, the former BT Alex. Brown Inc. equities trading executive who was hired by Bank of America in 1999 to start the group, said that there are considerable opportunities in Europe given the recent consolidation in investment banking.
He also cited the debut of the euro currency and the recent pension law reforms, which make it easier for institutions to invest in stocks, as reasons for his optimism.
Mr. Kendall, who reports to Scott Kovalik, the head of equity trading at Banc of America Securities in San Francisco, said he expects to hire another 10 or 15 people in London over the next few months.
The company also says it hopes the equities trading business will help it boost its investment banking, brokerage, and derivatives trading operations in Europe.
Mr. Kendall said the group has hired about 10 investment bankers, most specializing in telecommunications, and plans to add more bankers when opportunities arise.
The trading operation formally entered the market last summer, and in January the roughly 30 or so London-based analysts began issuing their first research reports. They analysts focused in seven target areas: financial services, telecommunications, media, technology, pharmaceuticals, energy, and aerospace and defense.
Thomas Theurkauf, an analyst at Keefe, Bruyette & Woods Inc., said Bank of America still is not as well-known in Europe as other major U.S. investment banking firms that have been in Europe longer, like Merrill Lynch & Co., Goldman, Sachs & Co., or Morgan Stanley. They are playing a little bit of catch-up there.
He said he was modestly surprised to learn of the recent hirings in London, but said it is part of the companys effort to boost fee-producing businesses in Europe.
Directionally, what the bank has attempted to do over the past couple of years is reconfigure their European franchise away from credit-driven products and more towards equities, and, for that matter, fee-driven activities, Mr. Theurkauf said.
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