Sticking to its recent decision to build internally rather than through costly acquisitions, Bank of America Corp. said it is embarking on a drive to hire retail brokers.
On Monday the Charlotte, N.C., companys Banc of America Investment Services said it plans to beef up its 600-strong brokerage ranks by hiring 200 licensed brokers and training an additional 1,000 employees to sell investment products like mutual funds and certain annuities.
But the announcement, coming as it does during a faltering stock market and a slowing economy, is a bit of an about-face for the company, which three years ago laid off 300 brokers and support staff.
In early 1999 Bank of America laid off brokers and support employees. The company said changing market conditions and overlaps between BankAmerica Corp. and NationsBank Corp., which merged to create what is now Bank of America in September 1998, forced the layoffs.
The brokerage hiring efforts are part of the companys yearlong organizational realignment effort, in which the unit has been putting licensed brokers throughout its far-reaching branch network.
Ronald Newth, chief operating officer of Bank of America Investments Services, said that, while executives are aware current market conditions may be keeping investors on the sideline, the timing was still right for a brokerage expansion.
Because of the composition of our customer base and the largeness of our franchise, we believe this an untapped market for us, he said. In addition to addressing overlap, he said, the layoffs reflected a redefining brokerage business at Bank of America.
Now executives are trying to address missed sales opportunities, he said.
Competitors in some of Bank of Americas biggest markets have also been staffing up, either by making hires or by purchasing a brokerage firm.
Bank of America has some catching up to do to beat its rival First Union Corp., also of Charlotte First Union has hired 700 new Series 7 brokers by recruiting from other regional firms and wirehouses. Through several acquisitions it has managed to boost its army of brokers to some 4,400.
Across the country in California, where B of A plans to do most of its hiring, Wells Fargo & Co. of San Francisco has also been busy building its sales force.
Last year Wells Fargos private client services group hired 290 Series 7 representatives, not including the employees it gained when it acquired brokerages like First Security Van Kasper.
David Skolnik, a senior vice president and director of national sales and marketing for Wells Fargo private client services, said the group plans to increase hires by at least 10% this year.
Thomas Theurkauf, an analyst at Keefe, Bruyette & Woods Inc., said Bank of Americas strategy contains both offense and defense plays, it has drawn up to beat out nonbank brokers for investor dollars.
Banking companies like B of A are forced to compete for that business, even if they know it will not be that lucrative, Mr. Theurkauf said. You dont want customers to gravitate elsewhere.
A key element of Bank of Americas brokerage expansion is California, which was BankAmericas home state and is responsible for about 27% of the companys $358 billion of deposits nationwide.
Despite reports of widespread customer and employee dissatisfaction in California with the managements handling of the merger, which only worsened when the company pushed through a dramatic national layoff scheme last summer that earmarked thousands of job cuts, Bank of America has continued to keep the lead in deposits. It now has about a 20% share of deposits in California.
Banc of America Investment Services will put half of the 200 of the new Series 7 brokers and one-third of the new Series 6-licensed representatives in California.
Bank of America is clearly focused on pushing its $73 billion asset management group which contains retail brokerage as well as private banking and capital management to the fore of the group. The company recently hired Richard M. DeMartini, a senior executive from Morgan Stanley Dean Witter & Co. in New York, to head the asset management division. He will join the company next month.