BofA CEO Feels His Bankers' Pain: ‘We Got a Little Too Careful’

(Bloomberg) -- Bank of America Corp. is loosening the reins on its investment bankers.

The lender is sending out dealmakers in search of more middle-sized transactions in the U.S., seeking to regain market share after cutting back on risk. It’s hiring at a fast clip to build out its ranks with capital-markets expertise, according to Brian Moynihan, the bank’s chairman and chief executive officer.

“We got a little too careful,” he said Wednesday in an interview with Bloomberg Television in New York. “We lost some share in midsize client M&A deals in the United States. We shouldn’t do that -- and the team saw that, and that’s what they’re after.”

The company hasn’t changed its risk posture and is sticking to its mantra of “responsible growth,” Moynihan said. “We have a $600 billion balance sheet every day in the markets and the trading business. And so we take a lot of risks -- it’s just we take it in the areas we think we can understand.”

The company’s investment-banking fees dropped 18 percent in the third quarter to $1.2 billion, driven primarily by declines in advisory and leveraged finance, it reported in October. The slump followed senior-level departures in 2018’s first half, and by midyear, people with knowledge of the situation said some defectors had grown frustrated with the bank’s limited risk appetite, believing they could make more money elsewhere.

In September, corporate and investment-banking chief Christian Meissner announced that he, too, would step down, to be succeeded by Matthew Koder.

“We switched leadership to start to drive the business deeper in the U.S.,” Moynihan said.

See also: Bank of America is said to plan recruiting up to 50 dealmakers

Separately, the bank’s trading business is unlikely to get a big boost from surging financial-market volatility late this year, the CEO said.

For overall trading revenue, “in late November, we probably thought we’d be up a few percentage points over last year; now we’re probably down a few percentage points” this quarter, he said. While equity-trading volumes have risen, the bank doesn’t make as much money on those activities as it does on derivatives and financing, he said.

“Yes the volumes go up, there’s not a lot of risk, and there’s by definition not a lot of reward,” Moynihan said.

©2018 Bloomberg L.P.

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