In his second major organizational move since taking charge of Bank of America Corp.s global corporate and investment bank this spring, Edward J. Brown 3d has shuffled the leaders of the banks large but increasingly problem-ridden debt businesses.
The Charlotte, N.C., banking company is merging all debt activities of its corporate and investment banking units. In a press statement Monday, the company announced that Bill Hodges had been named head of debt product origination and structuring, and Duncan Goldie-Morrison head of debt markets activities, including trading and research.
Carter McClelland, the former Morgan Stanley banker who had been charged with building Bank of Americas advisory business, is now responsible for emerging markets investment banking and corporate banking activities in Europe, the Middle East, and Africa.
The company also named Ed Carter as head of corporate and investment banking. Mr. Carter is based in New York and reports to Mr. McClelland.
Thomas Bunn, the high-profile former head of debt capital-raising for Bank of America and a veteran of the old NationsBank Corp. who became head of leveraged finance in June, is out of a job altogether.
The changes came just days after Bank of America said it would write off more than $1 billion of loans during the fourth quarter, forecasting deteriorating credit quality into next year. The company has been caught on the losing side of several large, syndicated credits recently, including a nearly $500 million exposure to a nonperforming loan believed to be part of a credit to the beleaguered Sunbeam Corp.
Bank of America has become one of the largest lead managers of large corporate loans, battling neck-and-neck with Chase Manhattan Corp. for the annual top spot in the rankings.
However, following last weeks warning, which sent its stock falling 9%, Bank of America said it would not renew $20 billion of credits in its syndicated portfolio.
In an interview, Mr. Brown said the changes were part of the evolution of where we are in various products, about delivering investment banking products, and what is going on in the market. The reorganized debt group, he said, would be better attuned to a market in which institutional investors not lenders hold increasing sway.
The market is changing into one that is more reliant on institutional marketplace, Mr. Brown said. While there will be more of a market for debt products, he said, either banks or institutions will buy it.
Mr. Brown said the organizational changes are unrelated to the banks recent loan problems. Weve been having these conversations for some time, he said. The bank delayed the reorganization until it had integrated its corporate and investment bankers. Prior to the integration, he said, we had an environment where we had investment bankers and corporate bankers, and we werent ready to make this change.
Theres no confusion now.
The reorganization, announced Monday, extended an earlier shake-up set in place by Mr. Brown soon after his promotion in early July. At that time, Mr. Hodges was given responsibility for debt capital raising and real estate finance. He also took over the high-profile syndicated loan group previously run by Mr. Bunn.
Mr. McClellands power base was also expanded in the July shake-up. Equities shifted to him. The equities group had been run from San Francisco by Lewis Coleman, a former senior executive of the old BankAmerica Corp. Mr. Coleman has said he would leave the company at yearend.
The reorganization also reflects a shift in power to New York. Mr. Bunn had resisted moving the leveraged debt group, but Mr. Goldie-Morrison agreed to relocate to New York.
Mr. Bunn was one of the chief architects of the banks corporate lending franchise. He has left the company and did not return phone calls.
Described by a former colleague in a 1999 American Banker story as the Jimmy Lee of the South, Mr. Bunn had already seen some of his responsibilities erode in the July management changes.
But despite losing control of loan syndications, he kept responsibility for leveraged finance including an at-times turbulent high-yield unit and also took on responsibility for the banks activities in Europe, the Middle East, and Africa.
He reportedly declined an offer this summer to take over Donaldson Lufkin & Jenrettes leveraged sponsor group.
Bank of Americas high-yield business has fared no better than the competition in a dismal year. Mr. Brown said he did not fire Mr. Bunn, but that he was a casualty of the reorganization. As I went through the process of putting leaders in various slots that I have, there wasnt a place for Mr. Bunn, Mr. Brown said.