The executive team that Bank of America Corp. announced Thursday to head its private wealth management business after it buys U.S. Trust Corp. would bring a more centralized leadership approach than either company has used.
Five regional directors would report to Frances Aldrich Sevilla-Sacasa, who is to run B of A's private wealth management group, targeting individuals with assets of more than $3 million.
Three executives are from Bank of America, which expects to complete the $3.3 billion acquisition early next quarter: Tim Maloney, who is to run the central region, encompassing states from Texas up to Iowa; Alan Rappaport, who is to run a region that includes several states around New York; and Doug DiVirgilio, who is to run the southeastern region. Eric Hayes, slated to run the northeastern region, and Tracey Warson, to run the western region, are with U.S. Trust.
Ms. Sevilla-Sacasa said both U.S. Trust, a New York unit of Charles Schwab Corp., and Bank of America, which is based in Charlotte, have taken a regional approach, but B of A had eight regions and U.S. Trust seven. She said the companies decided to shrink those to five because "a more centralized regional leadership was more appropriate with more market-level management and a team structure."
A second group of five executives were also named to report to Ms. Sevilla-Sacasa, four of whom are with U.S. Trust. They include Leo Grohowski, U.S. Trust's chief investment officer, who will run investments; and Henry Fischel Bock, who heads U.S. Trust's multifamily officer practice and would run a new specialized solutions group. Lynn Davis, who leads wealth structuring at U.S. Trust, and Bob Lynch, who leads banking and credit, are to run similar groups for Bank of America. Mick Ankrom, a quality and productivity executive in Bank of America's global wealth and investment management group, would run client and business management.
Ms. Sevilla-Sacasa, who would be president of the private wealth management business, said that under the new management structure, the most talented people from both companies were promoted. "When you bring together two large, well-established organizations, we tried to adopt the best practices and the top talent from both organizations," she said.
Ms. Sevilla-Sacasa has been the No. 2 executive at U.S. Trust since joining it from Citigroup Inc. in November 2005. Bank of America announced last month that she would be the top executive in its private wealth management business. That followed the announcement that Peter K. Scaturro, U.S. Trust's chief executive officer, would not be joining B of A.
Analysts speculated that Mr. Scaturro clashed with Bank of America's executives over how the combined company should be run.
Ms. Sevilla-Sacasa said she worked with Mr. Scaturro for seven years at both Citigroup and U.S. Trust. "At the end of the day, people have to make their own personal decisions and move on," she said.
"I think there are a lot of healthy discussions and at times some turmoil when two large organizations come together," she said. "I think all of these discussions have been very healthy and the transaction is on track."
Richard X. Bove, an analyst with Punk, Ziegel & Co., said he expects the combined operation to have a Bank of America feel.
"B of A is bigger than U.S. Trust in every business line, and though management may favor U.S. Trust now, the practices and procedures will lean toward B of A's approach," Mr. Bove said. "B of A isn't a neophyte in this business."
Ms. Sevilla-Sacasa said the biggest hurdle the two companies have faced since announcing their deal has been that "one organization is part of a broader financial organization and the other was really only in wealth management."
"I think that there were some differences and there were also some benefits," she said. "Being a part of a broader firm is a great advantage for U.S. Trust in that we can deliver more to our clients and Bank of America can leverage off of U.S. Trust's distinctive history and approach."
Bank of America also announced the postmerger top-line leadership structure for its alternative investments group and Columbia Management, its asset management organization.
David Ballien, who heads alternative investments at U.S. Trust, would do the same at Bank of America, and Keith Banks would continue to run Columbia.
The private wealth management business would consist of what is now U.S. Trust, Private Bank of Bank of America and its family wealth advisers unit. B of A will make an announcement in the next couple of weeks about the branding of these businesses.
The company announced that Private Bank of Bank of America president Jane Magpiong will leave in the fall to "pursue new opportunities."
At its investor day in February, B of A announced plans to increase its sales staff 1.3%, to 2,077, this year, with an emphasis on Texas and California. Ms. Sevilla-Sacasa said B of A and U.S. Trust are in every major market nationally.
Assets under management at Bank of America's global wealth and investment management division rose 12.6% last year, to $542.9 billion. But Brian Moynihan, the division's president, said in February that in major markets there is a lack of awareness that B of A offers private banking and wealth management.
He said he hoped that would change after the acquisition After the deal is completed, B of A's private bank and its family wealth advisory group would have 118,000 client relationships with $270 billion of assets under management.
But Ms. Sevilla-Sacasa said the deal was not about size. "Private banking is not a mass-market type of business," she said. "The scale gives us the resources to invest in our business and attract top talent and make sure that we are positioned to be innovative and create unique solutions for our clients."
Mr. Bove said he expects the merger to succeed and that he doubts many U.S. Trust clients will leave. "If I was a U.S. Trust customers and suddenly I was introduced to a wider array of services accompanied with the same level of personalized services, I certainly wouldn't walk," he said.
