The biggest US bank said after the market closed which Joe Price, head of consumer banking, and Sallie Krawcheck, head of worldwide wealth and investment management, have left. Price was a former chief financial officer from the company, and Krawcheck was a former CFO of Citigroup, leader of its Smith Barney brokerage unit and sometimes touted as the highest ranking woman in the financial services industry.
Leader Brian Moynihan named commercial banking head David Darnell and investment banking mind Tom Montag, a former Goldman Sachs executive, to new positions as co-chief working officers.
The changes are effective immediately, the company said. A bank spokesman said neither Moynihan nor the executives active in the shifts were available for comment.
Investors did not seem convinced that the reorganization indicates Moynihan now includes a steady hand on the controls of a company battling a barrage associated with litigation and loan losses.
BofA stock inched up to $7. 03 within after-hours trading after closing at $6. 99 on the New York Stock market on Tuesday.
"It seems apparent Moynihan is under pressure to make a few bold moves, " said David Dietze, chief investment strategist at Point Look at Financial Services in Summit, New Jersey, which owns BofA shares. "Obviously there is disagreement among people at the very top who have lots of options and lots of experience. "
The shake-up comes under two weeks after billionaire investor Warren Buffett invested $5 billion in the bank's preferred stock and following the company announced it would shed 3, 000 jobs this quarter. The moves only temporarily arrested a share-price decline as investors fear the financial institution remains on the hook for billions of dollars of mortgage-related losses.
Krawcheck and Price managed key areas of the company's Merrill Lynch operations, which Bank of America bought during the financial crisis and has shown to be one of its most profitable businesses. Both, however, were closely allied along with Moynihan's predecessor Kenneth Lewis, whose purchase of Countrywide Financial Corp is accountable for much of its continuing losses.
NEW ROLES, NEW BAR SET
In their own new roles, Darnell -- a veteran commercial banker who also worked carefully with Moynihan -- will oversee consumer banking operations, including the Merrill Lynch list brokerage operations. Montag will run divisions that work with corporate and institutional clients.
"Moynihan has just raised the bar for a small group of professionals, including those loyal to former CEO Lewis, to step up and resolve the sins from the past in a more decisive and effective manner, " said Todd Hagerman, the banking analyst at Sterne, Agee & Leach.
The reorganisation comes as Bank of America hustles to shed assets to bolster its capital base and continues battling lawsuits associated with its 2008 purchase of Countrywide, once the nation's largest home lender.
The actual Charlotte, North Carolina-based bank paid $2. 5 billion to buy Countrywide, but writedowns and legal costs have pushed the estimated cost of this purchase to more than $30 billion.
Krawcheck, who was in charge of the Merrill Lynch brokerage unit in addition to of US Trust and other private banking units, was recruited by Lewis within August 2009. When he was forced into early retirement in September '09, she was touted as a candidate for the top job that eventually visited Moynihan.
She faced a daunting task in trying to harmonise various wealth management units that were largely competing to sell services and products to the same constituency of wealthy individual investors.
"It was never clear that Sallie Krawcheck gained traction using the retail salesforce, " said Jonathan Finger, managing partner at Finger Interests Ltd, the Houston-based investment management firm that owns Bank of America shares. "I'm unsure she ever had the respect of the bank's retail brokers. "
Such as Krawcheck, Price was once viewed as a possible successor to Lewis. Nevertheless, he has been dogged by questions about his role in negotiating the Merrill purchase within the heart of the 2008 financial crisis. The Securities and Exchange Commission accused the financial institution of failing to disclose to investors $15. 8 billion of losses that Merrill was to declare within the fourth quarter of 2008, even as it was paying out $3. 6 million of employee bonuses.
Bank of America paid $150 million to settle the actual SEC's civil lawsuit. The bank, Price and Lewis still face a civil fraud lawsuit through the New York attorney general's office over its allegedly inadequate disclosures.
Montag's ascendancy complements his meteoric rise in the bank. He was recruited to head Merrill's sales and trading operations from Goldman Sachs in 2008 at that time Merrill CEO John Thain, who was expecting Montag to reverse the corporation's massive mortgage-backed securities losses.
Within weeks of his August arrival, Thain was forced to set up a sale of the company to Bank of America. Montag, nevertheless, received a lot more than $50 million guaranteed under a recruitment contract that kept on giving. Last year, he was BofA's highest paid executive, earning $29. 9 million in total compensation that reflected a stock grant around $20 million under the contract.
He also acquired notoriety last year when a Senate investigative committee released reams of emails and other documents from Goldman Sachs included in its probe of the company's creation and sale of complex mortgage-backed securities that allegedly benefited Goldman in the expense of some of its clients. Montag wrote many of the e-mail, including one that famously described a collateralized debt obligation the company sold in 2007 as you "shitty" deal. That security lost 80% of its value.
A two-decade experienced of Goldman Sachs Group, Montag graduated from Stanford University and earned a good MBA from Northwestern University.