Bank of America Corp. preserved the mold–and addressed its longer-term future–by tapping Brian Moynihan late Wednesday to succeed Ken Lewis as chief executive.
The Charlotte, N.C.-based company's board announced after meeting in Charlotte that Moynihan, a company veteran who this fall became head of consumer and small business banking, would serve as CEO. He will succeed Lewis on Jan. 1.
Analysts had Moynihan, 50, for months as an obvious candidate because of his close ties to Lewis and a multifaceted role within the company that included stints as the general counsel and head of wealth management and investment banking, and they viewed his appointment to run the retail bank as a way of rounding out his resume.
Anthony Polini, an analyst at Raymond James Associates, says Moynihan made for a logical choice. "He is a very capable guy," Polini says. "It was a less-disruptive selection than an outside candidate."
Gary Townsend, the CEO of Hill-Townsend Capital, expressed skepticism over Moynihan's retail experience. "We need someone with instantaneous credibility who is strong in retail banking," he says. Moynihan is in that job now but he has only been there for" a few months.
Choosing Moynihan appears to endorse the business model Lewis and predecessor Hugh McColl Jr. built over decades, including coast-to-coast retail banking and market-leading positions in mortgage, credit cards, brokerage and investment banking. Moynihan was picked to run the investment bank in January following the ouster of former Merrill Lynch & Co. CEO John Thain.
"The selection says that while the economy and recession have been lousy, the board still believes that the company model is intact," Polini says. "It is a vote of confidence for the strategy."
In an interview Wednesday evening, Moynihan did not provide details of his plans but emphasized the board's support of the company's business model and his familiarity with many of his colleagues.
"The core businesses that we have arranged with hard work over last five to 10 years are second to none," he says. "The issue is we have the best franchise, and we have been through a tough economic cycle. What is going on in the job is to get the team to execute. We have cleared a lot of things in the last few weeks."
He also says the company "must continue to weather the recession and repair the balance sheet and [address] credit in the next 12 months. … The key is the economic recovery. If you look at what most people believe the economy is getting better."
Lewis plans to step down at yearend, and choosing Moynihan over other high-level candidates runs the risk of defections, some say. Analysts at times also viewed Barbara Desoer, who runs mortgages and insurance; Joe Price, chief financial officer; Tom Montag, investment banking head; and Sallie Krawcheck, who oversees wealth management and brokerage, as viable options.
