BofA Client-Meeting Quota Said to Vex Investment Bankers

Bank of America Corp. salespeople assigned to the world’s biggest stock portfolio managers were given new orders by their boss in September: attend at least 30 meetings a month with clients, or else.

That works out to 1.5 gatherings each business day, which riled the staff and spurred some to exaggerate their meeting logs to avoid missing goals ahead of bonus season, said two people with direct knowledge of the matter. They asked for anonymity because the new policy isn’t public.

The mandate from Soofian Zuberi, the Merrill Lynch veteran promoted to head of global equities distribution in May, shows the pressure Wall Street firms are under to take a bigger slice from the world’s shrinking pie of trading fees. Some workers regard Zuberi’s targets as unreasonably high, the people said.

“What he’s doing is pointing out that personal relationships bring in revenue,” said Brad Hintz, an analyst at Sanford C. Bernstein & Co. “He’s set a bar that is probably a little too high; this is saying you’re having client lunches five days a week and dinner about three days a week. Still, that has value, it forces sales guys to get out there.”

Chief Executive Officer Brian T. Moynihan, 53, has called Bank of America’s trading units critical to reviving profit at the Charlotte, North Carolina-based lender. The firm had $3.7 billion in equities trading revenue last year -- about 4 percent of total net revenue.

In Person

According to the people, Zuberi told his sales team of more than 500 workers in a memo that they need to see clients in person more often, rather than relying on e-mail and telephones. Bank of America could improve its market share by gaining a deeper understanding of client needs, the people said.

The 30-meeting quota is for equities sales staff members, including those who handle specialty lines such as derivatives and prime-brokerage. Their job is to pitch investment ideas and deliver research to analysts and managers at institutions including BlackRock Inc. (BLK) and SAC Capital Management LLC.

Zuberi also told workers assigned to traders at hedge funds and mutual funds to tally 20 meetings each month, the people said. That’s onerous to some employees because they don’t often leave their desks during trading hours, said one of the people.

The statistics will be internally listed so equities employees can see where they stand, Zuberi told them in his August e-mail, the people said. Those who fail to make the quotas can expect managers to address the shortfalls at year-end meetings, the people said. Workers use Bank of America’s customer-tracking system to log meetings, the people said.

Face Time

The equities sales chief “knows what it takes to get a client, knows how to put your hands around somebody’s throat and ask for the order,” said Bruce Foerster, president of South Beach Capital Markets and former head of the global equities syndicate at Lehman Brothers Holdings Inc. “I’m a big believer in face-to-face meetings so I can take the measure of somebody that I want as a client.”

The push to increase meetings won’t necessarily result in more commissions, said Sarah Quinlan, founder and chief investment officer of New York-based hedge fund adviser QAM.

“It’s not the number of meetings, it’s sitting there and coming up with a compelling idea that makes me want to feed you that commission,” Quinlan said today on Bloomberg Television’s “Market Makers” with Stephanie Ruhle. “You will be out with the clients who don’t actually have any money to spend; you’ll find the dead body down the street and say, ‘Let’s go do dinner.’”

Zuberi didn’t respond to voice messages and e-mails seeking comment on his initiative. Kerrie McHugh, a Bank of America spokeswoman, said the company had no comment.

Big Targets

Another change for the equities unit will be a focus on the 75 institutional clients seen as offering the greatest chance for growth in global fees, one of the people said. That list is winnowed from a previous emphasis on more than 200 accounts.

Equity desks are being squeezed amid the shift in investment flows from stocks to bonds and as profit margins shrink because of electronic trading. Revenue at the nine largest Wall Street firms, excluding adjustments for debt accounting, totaled $29.2 billion in the first nine months of 2012, an 11 percent drop from a year earlier.

Bank of America, the second-largest U.S. lender by assets, reaped $2.54 billion in equities trading revenue in that period, trailing Goldman Sachs Group Inc. (GS), Morgan Stanley (MS), Credit Suisse Group AG (CSGN) and JPMorgan Chase & Co. (JPM) Bank of America’s stock surged almost 68 percent this year through yesterday, the most in the Dow Jones Industrial Average, as its capital levels improved.

Expense Limits

Equities trading accounts for about a quarter of the industry’s trading and investment-banking revenue and includes commissions and gains from buying and selling stocks, futures, options and other equity derivatives, as well as fees and interest from providing services and lending to hedge funds.

Zuberi, who joined Merrill Lynch about 18 years ago, moved this year to New York from Hong Kong, where he was head of global markets sales for Asia. Previously, he was co-head of equity capital markets in the region. Zuberi reports to global equities chief Fabrizio Gallo.

Bank of America’s orders to dine more often with clients coincides with the company’s renewed drive to reduce costs, with Moynihan seeking $8 billion in annual savings.

The firm this year reminded staff about sticking to expense limits for meals and entertaining clients, the people said. Those are about $150 a person for dinner, $75 for lunch and $30 for breakfast. Some who break the caps have been asked to reimburse their employer by writing checks, angering the bankers, the people said.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Rick Green at rgreen18@bloomberg.net

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