Leo P. Grohowski said he stepped down as the chief investment officer of Bank of America Corp.'s wealth management arm and took the same job at Bank of New York Mellon Corp. because he wanted to continue in a role that focused on product manufacturing.
Mr. Grohowski will lead all investment strategy and investment management functions when he joins Bank of New York Mellon Wealth Management next week. He joined B of A when it bought U.S. Trust Corp. in July.
In an interview last week, he said that during the integration with B of A, many of U.S. Trust's product manufacturing capabilities were shifted to B of A's Columbia Investments and its newly created alternative investments unit.
"At U.S. Trust, after the Bank of America deal, the company decided to move the product manufacturing away from the integrated chief investment officer's office and into specialized businesses," he said. "I really enjoyed overseeing that integrated wealth management platform, including product manufacturing."
Mr. Grohowski had worked for U.S. Trust for two years. Before that he had worked in product manufacturing at Deutsche Asset Management Americas, Bankers Trust Corp., and HSBC Holdings PLC.
Several top U.S. Trust executives have left since Charles Schwab Corp. announced in November it planned to sell the wealth manager to B of A for $3.3 billion.
B of A has tried to minimize attrition, but Peter Scaturro stepped down as U.S. Trust's CEO in April, just a month after the Charlotte company said he would run the unit after the deal closed. His departure was announced amid rumors that B of A planned to change how U.S. Trust operates. In July, Goldman Sachs Group Inc. hired Mr. Scaturro to run its private wealth management business.
Richard X. Bove, an analyst at Punk, Ziegel & Co., said the departures of Mr. Grohowski and other top U.S. Trust executives indicate that "Bank of America is imposing new disciplines, and these new disciplines are being resisted by executives over there."
Mr. Grohowski acknowledged that changes had been made to U.S. Trust since the acquisition.
"Every firm is different. If every firm had the same business model, it wouldn't be too exciting," he said. "Every firm has to take advantage of what it deems to be its strengths. U.S. Trust is going to be a different business under Bank of America as it looks to take advantage of its new strengths."
Bank of New York Mellon Wealth Management had $162 billion of assets under management as of July 31. B of A's wealth management arm, now called U.S. Trust, Bank of America Private Wealth Management, had $220 billion.
Mr. Grohowski said he was impressed by the opportunities at the recently combined Bank of New York Mellon. "Both have made healthy strides into nontraditional asset classes. I look forward to continuing that. I am very interested in exploring some other capabilities that include capital markets."
B of A announced last week that it has promoted Christopher Hyzy to chief investment officer and Durraj Tase to head of capital markets and brokerage advisory in its wealth management arm. Mr. Grohowski had handled both of these roles as the chief investment officer.
Both Mr. Hyzy and Mr. Tase joined U.S. Trust in 2005 from Citigroup Private Bank's Latin American markets region, where Mr. Hyzy was the chief investment officer and head of product strategy and Mr. Tase was the head of capital markets.
Mr. Hyzy said in an interview last week that B of A moved capital markets out from under the umbrella of the chief investment officer in its wealth arm because clients demanded it.
"There is a natural movement to integrate capital markets and brokerage solutions and to focus on the asset and liability sides of the balance sheet," he said. "This is just a much more natural structure."
Mr. Tase said in an interview that capital markets and brokerage services are really outside the scope of traditional portfolio management, where the chief investment officer should focus.
"U.S. Trust was a strong asset management firm, but the combined organization now is focused on being a top-class wealth management firm," he said. "Wealth management requires us to think in a different way."
Mr. Hyzy said his unit needed two executives focused on specific areas. "If we left these two capabilities under the CIO's umbrella, it would really have impeded our overall growth. To have a complete asset allocation model, we needed to separate them out."
According to Mr. Bove, the changes may be in the best interest of B of A's wealth arm. U.S. Trust's assets fell 17% in the two years after Schwab bought it in 2000 and then were flat for five quarters. They stood at $138.8 billion on March 31, 2005. Then with a strong market tailwind, U.S. Trust's assets increased 14.6%, to $159 billion before B of A announced its deal in November.
"The fact is, B of A had to impose some new systems," he said. "There needed to be changes to this organization in order to make it a more profitable company."
