At least two candidates for the position of chief executive at Bank of America Corp. (NYSE: BAC) that the giant bank should consider breaking itself up into smaller firms, but board members in charge of the search for a new CEO have rejected the idea for the time being, according to several sources.
The board has been relatively reluctant to make sweeping changes to the Charlotte-based bank’s structure. Many believe that this reluctance is making it much more difficult for the company to find a new CEO to replace Ken Lewis, who is retiring at the end of the year.
Although several perceived deadlines have passed, company directors are still hoping to make a decision as soon as they possibly can.
Kenneth Lewis has suggested that he is willing to stay on longer if the board needs additional time, but most inside the firm believe that the firm will have a decision by the end of the year.
The candidates that have suggested questioning the size and structure of the financial behemoth that Lewis and his predecessors built include Michael O’Neill, a Citigroup director and former CEO of Bank of Hawaii Corp. O’Neill recently commented to the Bank of America search committee that the bank’s risk-adjusted capital was not being used as productively as it could. It’s been reported that O’Neill believes that the bank should become simpler and less prone to volatility. O’Neill said that any move to shrink the company would be analyzed thoroughly before proceeding.
Several search committee members have suggested that they are happy with the bank’s current business model. According to people familiar with the situation, it was clear on both sides that O’Neill would not be a good fit for the role.
Another candidate to succeed Lewis suggested that the board should take a serious look at its business plan given constraints that will include tighter regulatory scrutiny. That candidate said that Bank of America directors should begin discussing the possibility of shedding certain operations, as Citibank is doing, and consider the potential impact of more stringent capital requirements and shrinking profit margins on consumer products such as credit cards and mortgages.
Bank of America is currently the largest U.S. bank in terms of assets and has over 6,000 branches and 18,000 ATM machines. Currently the firm has accounts in some form with more than 53 million households in the U.S.
