CHARLOTTE, N.C. Bank of America Corp. has again reached outside its own executive ranks to jump-start growth in its asset management group.
On Monday the company named Alan Rappaport from J.P. Morgan Chase & Co. as president of its private bank, capping a reorganization aimed at boosting asset management revenues. The job overseeing services for the banks wealthiest customers was created last summer when the Charlotte company overhauled its high-growth asset management division.
Mr. Rappaport was a managing director of Chase Investment Advisors at Morgan Chase. He came to Chase when it bought the Beacon Group investment boutique, which he had joined after 17 years as a managing director at CIBC Oppenheimer.
Bank of America has gone outside the company for several high-level executives as Kenneth D. Lewis, its president and chief operating officer, focuses on building high-growth businesses. Mr. Lewis will become chairman and chief executive officer April 25, when Hugh McColl Jr. retires.
Mr. Rappaport reports to Richard M. DeMartini, who was hired in January from Morgan Stanley Dean Witter & Co. to run the asset management group. Mr. DeMartini, who had been chairman and CEO of Morgan Stanleys international private client group, succeeded Owen G. Bob Shell, who retired.
Mr. DiMartini recruited Mr. Rappaport, who is to start in his new job April 17. He is the latest executive to leave Morgan Chase since the merger late last year of J.P. Morgan and Chase Manhattan Corp.
A spokeswoman for Bank of America said Mr. Rappaport is joining it because of the opportunity.
Mr. DeMartini and Mr. Rappaport are based in New York, boosting the citys importance as a nerve center for Bank of Americas money management business. Besides the private bank, the business includes mutual fund, brokerage, and institutional investment management units.
The group had about $277 billion in assets as of Dec. 31. Of that, the private bank accounted for $129 billion, which analysts say makes it the largest U.S. banking operation focused on high net-worth customers. The private bank has 110,000 customers in 24 U.S. states and also operates in 100 foreign countries.
Revenues from the business grew 7% in 2000, to $2.28 billion. That accounted for 7% of Bank of Americas total of $32.7 billion. But Bank of America executives said they want more.
Ken Lewis has been very direct and wants our asset management business to become a much larger portion of the bank, Mr. DeMartini said in an interview. In a nutshell, we think that were in a growth industry thats very attractive, and we believe that the business has a lot of synergy to cross-sell and broaden our customer reach.
Christopher Bamman, an Advest Inc. analyst who follows Bank of America, said the recent hires are a sign of the banks efforts to build its asset management businesses. Theyre really emphasizing these business, to cross-sell to their corporate customers, [and] to their consumer customers, Mr. Bamman said. Bringing somebody in from J.P. Morgan Chase really highlights their commitment to this business. Its a real focus [and] growth area for them.
But some analysts said they are taking a wait-and-see approach. Nancy Bush at Ryan, Beck & Co. said Bank of America faces a challenge in competing against smaller private banking firms. Everybody is working hard to get private banking to grow, Ms. Bush said. But its a difficult business to do on a large scale. Its best done on an intimate, smaller scale, like a Northern Trust.
Mr. Rappaport is the last key appointment to the companys private bank leadership in a year of major changes. In July, Bank of America announced plans to cut up to 10,000 jobs nationwide over 12 months to save money and refocus on high-growth areas, such as investment management.
In August, it reorganized the private bank into five regions, plus an international private banking executive, all to be overseen by a national executive. The company had been trying to fill that job for about eight months, before hiring Mr. Rappaport.
After the 1998 merger of Bank of America and Charlotte-based NationsBank, the private bank had three presidents and 10 regions, according to a spokeswoman.
When it restructured the private bank, the bank lost two high-profile executives. Kathleen Brown, the former treasurer of California, resigned as president of the private banks West region. William Helms, who ran the private banks East region, also left.
In February, Ms. Brown resurfaced as a Los Angeles-based private banking executive for Goldman Sachs & Co.