Bank of America Corp. is folding its Premier Banking unit into Merrill Lynch Global Wealth Management, laying off several hundred workers in a division once touted as a potential driver of new revenue and profit for the nation's largest bank by assets.
Executives said the shift will better position Bank of America, based in Charlotte, N.C., as a wealth manager for clients with assets ranging from $100,000-$3 million, the so-called "mass affluent" sector targeted by Premier Banking.
A memo sent to employees this week outlined the changes, which primarily affect Premier Banking client managers who were in charge of face-to-face dealings with customers. These employees will relinquish that role and become "banking specialists," assisting the company's 18,000 financial advisers with recommendations on banking products. The advisers, 16,000 of whom came from Merrill Lynch & Co. following the Jan. 1 merger of the two companies, will take the lead with clients instead.
The change is a nod to Merrill, which already employed a similar model. The changes won't affect Bank of America's U.S. Trust unit, a private bank that caters to the ultra rich.
Bank executives said Premier Banking client managers were among those notified of layoffs last week, but they declined to say how many were let go. One person familiar with the situation said the cuts numbered in the hundreds.
As of 2006, Bank of America employed 2,320 Premier Banking client managers, with plans to add another 300 in 2007, according to a February 2007 investor presentation that touted its commitment to the Premier Banking approach. "Bank of America has invested heavily in a scaled model that satisfies affluent clients' banking and investing needs," according to a pamphlet accompanying the presentation.
But the addition of Merrill apparently changed the bank's view. There is "no comparison" between the Premier Banking and Merrill models, said Dean Athanasia, head of wealth management banking for Bank of America, in an interview.
The new model "gives the client the most resources going forward," he said.