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Bank of America ousted prominent executives Sallie Krawcheck and Joe Price on Tuesday as part of Chief Executive Brian Moynihan's efforts to reorganize the struggling company.
September 6
Bank of America Corp.'s dismissal Tuesday night of top wealth management executive Sallie Krawcheck may point to a deeper commitment to the Merrill Lynch business.
Krawcheck joined Bank of America in 2009, after stints at Citigroup and Sanford Bernstein. Through Bank of America's troubles, especially in the past month, its Merrill Lynch wealth management business has continued to perform.
That led to speculation that Bank of America would sell Merrill, but Tuesday's move may be a reaffirmation of the company's confidence in Merrill, said Alois Pirker, research director at Aite Group, a financial services research firm based in Boston.
"I think B of A has made the decision to hold onto Merrill, and if it takes a leadership change, then so be it," he said.
Krawcheck's ouster might signal more of a difference in opinion about direction than an actual change in direction for the wealth management business.
The shake-up by Bank of America Chief Executive Brian Moynihan comes as the nation's largest bank by assets continues to work through its 2008 merger with Merrill Lynch and on the heels of a $5 billion investment from Warren Buffett's Berkshire Hathaway.
David Darnell, head of commercial banking, will now serve as co-chief operating officer for wealth management and other businesses that directly affect individual investors.
The other operations chief, Tom Montag, will oversee Bank of America's banking and markets activities.
Chip Roame, managing partner of the financial services consulting firm Tiburon Strategic Advisors, said by email Tuesday: "I love the moves. It's a far more simple organizational chart."
"It's far more client focused. It's far fewer levels," Roame continued. Bank of America "was a top-heavy organization after so many mergers."
And while some industry observers praise Moynihan's move, it could be more difficult to win over Merrill Lynch's financial advisor ranks after a month of challenges for the firm.
Tuesday's events could be seen as more bad news for Bank of America, said Danny Sarch, the president of Leitner Sarch Consultants, a financial services recruiting firm based in White Plains, N.Y.
"I find it fascinating that everybody says that the Merrill Lynch part of the firm has been propping the firm up and yet the woman who was running the Merrill Lynch part of the firm is the one" to leave, Sarch said.
How the new leadership is perceived in relation to the bank versus the brokerage will also be important, said Bill Willis, president and chief executive of Willis Consulting.
As recently as April, the U.S. wealth management leadership slot was filled by John Thiel. Since he came up through Merrill Lynch, his appointment to the position was considered to be a nod to the New York firm's heritage.
"I am not sure that there will be a lot of financial advisors who will be heartbroken over the news" about Krawcheck's departure, Willis said.
"On the other hand," he said, "there may be some that are."
