Following a host of U.S. investment banks, Bank of America Corp. on Tuesday opened its first equities sales and trading unit in Europe.
The London-based operation, which sells shares in U.S. companies to European investors, was an obvious extension of the company's San Francisco-based equities business, according to Kent Logan, director of equities at Bank of America Securities.
"Given the importance that the European capital markets will play and our aspirations of being one of the top five U.S. investment banks, we have to have a platform in Europe," Mr. Logan said. He expects the company to become one of the top 10 European investment banks in equities over the next three to five years.
That would put the new Bank of America operation in the same league as Merrill Lynch & Co., Warburg Dillon Read, and Goldman Sachs & Co., among others.
Heading the new London unit are two recently hired local investment bankers. Philip Farrer, previously Merrill Lynch's chief operating officer for equity technology, is managing director and head of European equity sales. Stephen Kendall, managing director and head of equity trading in Europe, was managing director and head of pan-European equity trading at BT Alex.Brown.
Mr. Logan said several people from the San Francisco office will also relocate to London, where the group will eventually number about 20.
Bank of America has about 3,000 corporate and institutional clients in Europe. It employs 300 people there in capital markets areas, including foreign exchange, derivatives, and high-yield and high-grade securities.
"Outside of the United States, Europe is the second-most key securities market," said Brian Eisenbarth, portfolio manager for Collins & Co. in San Francisco. A bank that is "not participating there" is giving up an important opportunity, he said.
Bank of America's European equities business grew out of an operation started 20 years ago by the boutique investment firm Montgomery Securities. NationsBank Corp. bought San Francisco-based Montgomery in 1997, and then merged with the former BankAmerica Corp. last year, changing its name to Bank of America.
Analysts said the current expansion makes sense. Bank of America's U.S. securities franchise is finally reaping returns from the three-way merger integration.
As of June 30, Banc of America Securities was No. 19 in the ranking of lead managers for public and private equities, according to Thomson Financial Securities Data.
It was also the ninth-largest investment bank in trading volume for the first seven months of this year, according to Autex/BlockData.
The $614 billion-asset company has plans to expand its international equities sales and trading business as well, Mr. Logan said. It already has a small team trading international securities out of its New York office.
