Bank of America Corp. (BAC), seeking to reverse a 48 percent share slide this year, named Tom Montag and David Darnell as co-chief operating officers and ousted Sallie Krawcheck and Joseph Price from its management ranks.
The latest top-level shakeup by Chief Executive Officer Brian T. Moynihan, 51, leaves Montag running investment banking and operations that serve companies and institutional clients, the Charlotte, North Carolina-based company said in a statement today. Darnell will run units serving individual customers, including deposits, wealth management, credit cards, small businesses, and mortgage operations.
Moynihan is cutting layers of management at the largest U.S. bank by assets as he grapples with mortgage losses from the 2008 acquisition of subprime lender Countrywide Financial Corp. and works to meet tighter capital requirements. The firm is in the midst of an expense-reduction initiative called Project New BAC that may slash tens of thousands of jobs.
“‘Tuesday afternoon massacre,’ is what I’d call it,” said Nancy Bush, a bank analyst and contributing editor at SNL Financial, the bank-research firm in Charlottesville, Virginia. “Brian is under pressure, the company is under pressure, and when you’re transmitting your message to so many different people, I think it’s harder to get results. And clearly he was not getting results as quickly as he would have liked.”
Montag, 54, a former trading head at Goldman Sachs Group Inc., gains responsibility for commercial banking operations previously handled by Darnell. Wealth-management operations that were overseen by Krawcheck now will be run by Darnell, who also takes over Price’s former retail-banking units.
Bank of America is the biggest decliner this year in the 24-company KBW Bank Index (BKX), dragged down by more than $30 billion in expenses and writedowns tied to faulty mortgages since Moynihan became CEO. Moynihan has sold more than 20 assets and units to bolster capital while fending off speculation that he’d need to issue new common stock.
Berkshire Hathaway Inc. agreed last month to invest $5 billion in preferred shares and warrants as Chairman Warren Buffett called the bank a “strong, well-led company.” The bank advanced 3 cents to $7.02 at 6:31 p.m. in extended trading in New York.
Krawcheck, 46, ran Citigroup Inc.’s wealth-management unit before joining Bank of America in August 2009. She oversaw more than 15,000 financial advisers under Bank of America’s Merrill Lynch brand.
Price, 50, served as the bank’s chief financial officer until early last year, when Moynihan took over and named him to head consumer banking. That put Price in charge of more than 5,000 retail offices.
‘At the Top’
“It became evident that streamlining could be done at the top as well as throughout the organization,” Price said in the statement.
Moynihan said in April that Bruce Thompson was replacing Charles Noski as chief financial officer, and Gary Lynch, formerly a U.S. Securities and Exchange Commission enforcement director, was hired to oversee legal and compliance operations. The CEO announced in July that Terry Laughlin would succeed Thompson as chief risk officer.
Moynihan struck deals to cut stakes in BlackRock Inc. and China Construction Bank Corp. and divest insurance units and non-U.S. credit-card businesses as he scales back the company left to him early last year by predecessor Kenneth D. Lewis.
“Only by streamlining and focusing our resources behind our customers will we truly deliver on the promise of what we have built,” Moynihan said.