BofA Chief Moynihan Said to Summon Managers for Revenue Push
Bank of America Corp. Chief Executive Officer Brian T. Moynihan has summoned more than 100 of his regional leaders to a private meeting today where they’ll be pushed to boost the lender’s flagging revenue, said two people with direct knowledge of the project.
Managers at the two-day event in Chicago will be judged on how much progress they’ve made in helping to sell more products to the 53 million customers of the second-biggest U.S. lender, said the people, who asked for anonymity because Moynihan’s plan hasn’t been made public.
Revenue has dropped every year of Moynihan’s three-year tenure as he sold assets, repaired the firm’s balance sheet and settled more than $40 billion in claims tied to defective mortgages. He’s integrating the remaining units more closely to coax extra business from clients, a tactic known as cross- selling that has worked for Wells Fargo & Co. (WFC) while falling short at firms such as Citigroup Inc. (C)
“We’re now at the point with Bank of America when it’s about boots on the ground rather than the latest lawsuit,” said Nancy Bush, an analyst at SNL Financial LC, a bank research firm in Charlottesville, Virginia. In the past, the lender was “notably lousy” at cross-selling, she said.
The strategy typically could involve asking a depositor to take out a mortgage, add a credit card or sign up with the Merrill Lynch brokerage. Former Citigroup CEO Sanford “Sandy” Weill used the idea to justify his 1998 creation of the so- called financial supermarket by merging a consumer bank with an insurer, theoretically providing one-stop shopping.
Vikram Pandit, Citigroup’s CEO until last year, disowned the strategy before his ouster from the New York-based company.
Under Moynihan’s plan, regional leaders will be graded and ranked on whether they meet targets in about 30 categories of referrals, said the people. One metric could be how many leads commercial bankers are sending to financial advisers, said one person. Referrals reached 1 million last year, said the person.
The regional leaders, called market presidents, previously had a largely ceremonial title as a bank representative for activities including charitable giving in their city or state, according to the people. Most also have full-time jobs in areas including wealth management and corporate banking.
Moynihan’s push coincides with Bank of America’s new marketing campaign, scheduled to be introduced this month, which emphasizes the ways customers can be served by deposit, credit- card, mortgage, wealth-management and investment-banking units, said the people.
“We’re very focused on managing the company to harness the power of every connection we can make for our customers and clients,” said Larry DiRita, a spokesman for the Charlotte, North Carolina-based bank.
Cross-selling has had a mixed record in banking, said Charles Peabody, an analyst with Portales Partners LLC in New York. Among U.S. banks, San Francisco-based Wells Fargo does it best, he said. The most valuable lender by market value sells 6 products per retail household, and almost 7 per corporate relationship, the firm said in a presentation. That helped revenue advance 6 percent last year.
“Everyone says they can do this, so it’ll be interesting to see if Brian can pull it off,” Peabody said. Bank of America, which set an $8 billion goal for annual cost cuts, must also improve revenue to reach profit targets, he said.
Moynihan was promoted to CEO in late 2009 in part on his plan to shun takeovers and better integrate the $130 billion in businesses bought by his predecessor, Kenneth D. Lewis. Moynihan, 53, made Thomas K. Montag and David Darnell co-chief operating officers in late 2011, charging them with improving cooperation among institutional and retail divisions. They are expected to attend the Chicago meeting, the people said.
Market presidents gathered for the first time in November as the project started, and this week’s meeting will measure progress made since then, said one of the people. The lender has named at least 10 new local leaders in the past year, including Adriana Kong Romero, who covers Tucson, and David Millman, who was is responsible for Maryland.
Obstacles may include complaints about the bank’s customer service, mostly stemming from mortgage servicing. Bank of America had the lowest satisfaction rating of the four biggest banks in 2012, according to the Ann Arbor, Michigan-based American Customer Satisfaction Index. It also had the most complaints lodged with the Consumer Financial Protection Bureau.
“We have been intensely focused on improving the process for our mortgage servicing customers and, importantly, virtually all (98 percent) of the mortgage-related files received from CFPB since the process was initiated have been closed,” said Rick Simon, a spokesman for the lender, in an e-mail.
Bank of America shares rose 4.7 percent this year in New York trading through yesterday, following the 109 percent surge in 2012 as capital levels and the U.S. economy improved. Revenue fell as the company sold businesses and assets worth $60 billion and faced new limits on debit-card fees, sliding 11 percent to $84.2 billion last year and 15 percent to $94.4 billion in 2011.
At Bank of America’s most recent town hall-style meeting in January, an employee asked Darnell, 60, how managers intended to replace the lost money.
“As you go from a primary relationship with us, to credit, investments, small business and all the things that we can provide, the revenue (BAC) multiplier as you go up those stair steps is powerful,” Darnell said. “Multiply that times the numbers of customers we can apply that to.”
To contact the reporter on this story: Hugh Son in New York at email@example.com