Bank of America Corp. (BAC), the biggest U.S. lender, promoted Brian Moynihan to chief executive officer, putting him in charge of repairing the company after the tumultuous takeover of Merrill Lynch & Co. pushed Kenneth D. Lewis into early retirement.
Moynihan, the 50-year-old head of the consumer banking unit, takes over at year's end, the Charlotte, North Carolina- based bank said today in a statement. Lewis, 62, said Sept. 30 he'd step down by the end of this year.
"What we need to do now is very simple," Moynihan said in the statement. "We need to execute."
Bank of America's new boss must stanch defaults on consumer loans tied to the recession, which led to two losses in the past four quarters. He must also integrate Merrill Lynch and smooth relations with regulators after they clashed with Lewis over the purchase. The bank paid back $45 billion to the U.S. Troubled Asset Relief Program on Dec. 9.
Moynihan takes charge of the biggest U.S. lender by assets and deposits, the No. 1 home lender and the largest issuer of debit cards. He'll also oversee underwriting, trading and retail brokerage operations of New York-based Merrill Lynch. The bank counts 53 million consumer and small-business customers in 150 countries at 6,000 offices, and the company's stock is a component of the Dow Jones Industrial Average.
The board, led by Chairman Walter Massey, tapped Moynihan after sorting through half a dozen internal candidates including Gregory Curl, 61, the bank's chief risk officer, who was favored by Lewis, a person familiar with the matter has said. Robert Kelly, 55, CEO at Bank of New York Mellon Corp. and the leading outside candidate, dropped out on Dec. 14.
Moynihan joined Bank of America through its 2004 purchase of FleetBoston Financial Corp., where he led the brokerage and wealth management unit and directed strategic development for six years. At BofA, he has been president of the global wealth and investment management unit, spent a month in 2008 as general counsel, then replaced former Merrill Lynch CEO John Thain in January to head the investment bank and wealth management units. In August, he was assigned to head the retail bank, including oversight of credit card operations.
Bank of America posted losses in last year's fourth quarter and the third quarter of 2009. Still, the bank posted a cumulative profit of $6.5 billion for the first nine months of this year, aided by gains at Merrill Lynch from trading stocks, bonds and currencies.
The U.S. injected $45 billion into Bank of America through the purchase of preferred shares, including $20 billion approved in January after the Merrill Lynch takeover to keep the deal from collapsing. The bank redeemed the shares earlier this month after raising $19 billion through a stock sale.
Lewis almost didn't survive the Jan. 1 acquisition as fourth-quarter losses at the investment bank mounted. Treasury Secretary Henry Paulson said Lewis might be removed for trying to cancel the takeover, and shareholders later stripped him of the chairman's title.
The bank needs brokerage and investment-banking fees to overcome higher losses in its credit-card and home-loan businesses, which make up about 36 percent of revenue.
The U.S. unemployment rate stood at 10 percent in November. Lewis told employees in September when he announced his departure that "a near double-digit unemployment rate is bad medicine for a bank that serves consumers," and he predicted that "the next two quarters will be difficult."