BofA’s Moynihan Says Lender Has Prepared for ‘Turbulent Times’
“We greatly strengthened our risk culture in 2011, and that work has laid the foundation that will carry us through whatever turbulent times may lie ahead,” Moynihan wrote in a letter posted yesterday to an internal employee website. A copy of the message was obtained by Bloomberg News.
The bank is “simplifying our business model and organization, continuing to shed non-core assets and businesses, and reducing risk-weighted assets,” he wrote. “2012 will be a year for continued improvement in risk-management practices across the company.”
Moynihan, 52, plans to trim about $5 billion in annual costs by 2014 at the second-biggest U.S. lender to combat stagnant revenue and a sagging stock price. Shares of the Charlotte, North Carolina-based bank dropped 58 percent this year amid rising costs tied to faulty mortgages and concern that Europe’s debt crisis will derail the global economic recovery.
Bank of America cut riskier assets by $117 billion from the third quarter of 2010 and reduced risks tied to European sovereign and corporate debt by 43 percent since 2009, Moynihan wrote in the letter.
His predecessor, Kenneth D. Lewis, spent more than $130 billion on acquisitions to create the largest U.S. lender by assets, a rank the company held until this year. To improve capital levels ahead of stricter international rules, Moynihan has agreed to sell more than $47 billion in assets and units since taking over at the start of 2010. The bank is mostly done with such divestitures, he wrote.
“We can focus all our energy and $3 billion in technology investments -- the ‘peace dividend’ that derives from no acquisitions/integrations -- on increasing the pace of innovations” and improving service, he wrote.
To contact the reporter on this story: Hugh Son in New York at firstname.lastname@example.org
To contact the editor responsible for this story: David Scheer at email@example.com