Oct. 22 (Bloomberg) -- Bank of America Corp. replaced the head of its global structured products unit, less than a week after blaming its investment bank for a 32 percent drop in third- quarter profit.

Chris Hentemann left the company, the nation's second- largest bank, on Oct. 19, spokeswoman Louise Hennessy said in an interview today. Chief Executive Officer Ken Lewis said Oct. 18 that investment banking will be scaled back following about $4 billion of trading losses, defaults and writedowns at the Charlotte, North Carolina-based company.

Hentemann became one of the first casualties at Bank of America after Lewis called the quarter ``unacceptable'' and vowed to curtail investment banking. The results included a net revenue loss of $527 million on structured products. While tumult in credit markets played a role in trading losses, Lewis said the bank deserved most of the blame.

``They are studying how large investment banking needs to be,'' said Nancy Bush, an independent bank analyst in Aiken, South Carolina, who added that the company began cutting staff last week. ``Every bank has contingency plans in the case of a bad quarter, and my understanding is that some of those plans were activated.''

Spokesman Scott Silvestri declined to comment on staff cuts. Hentemann's departure was initially reported by the Informa news service. George Ellison, head of global structured finance, takes over Hentemann's responsibilities, Hennessy said. A call to Hentemann was not immediately returned.

Lower Fees

Bank of America gained 21 cents, or 0.4 percent, to $47.78 in 4:02 p.m. New York Stock Exchange trading. The stock has lost about 11 percent this year.

The structured products unit, part of the corporate and investment banking operation, was hobbled by lower fees and trading declines caused by disruptions in credit markets and ``ineffective'' hedges, the company said in last week's earnings statement. The unit handles asset-backed and residential mortgage-backed securities, commercial mortgages, collateralized debt obligations and structured credit trading.

Markets for some securities backed by residential mortgages came to a near-standstill in the third quarter amid concern over rising defaults and U.S. foreclosures. The latter set a record in the second quarter, according to the Mortgage Bankers Association.

Hentemann's departure follows dismissals of high-profile fixed-income executives at Merrill Lynch & Co. and Citigroup Inc., which posted much larger writedowns, said Keith Styrcula, president of the Structured Products Association, a trade group.

Cuts at Merrill

Earlier this month Merrill fired its head of fixed income, Osman Semerci, and one of his top two deputies, Dale Lattanzio, Merrill also severed ties with Dow Kim, former co-head of investment banking and trading.

On Oct. 11 Citigroup replaced Thomas Maheras, who ran trading, and Randy Barker, a senior fixed-income executive. The company promoted Vikram Pandit to run trading, investment banking and alternative investments.

``Bank of America has ``superb talent and deep bench strength,'' Styrcula said. ``But I think we are going to see a series of these departures in the industry over the next year to year and a half.''

To contact the reporter on this story: David Mildenberg in Charlotte, North Carolina, at dmildenberg@bloomberg.net.

Last Updated: October 22, 2007 16:33 EDT