In a recent interview, Bank of America (NYSE:BAC) CEO designate Brian Moynihan stated he isn’t going to do any shuffling at the top of the banks leadership, and is looking to keep things in place at the company in that regard.
This makes sense because of the obvious turmoil in the market, and the focus Moynihan says he’s going to have going forward as leader of the giant bank, and that is to no look at taking on new businesses, and targeting the ones they have in order to improve them.
So keeping the current top executives at the company makes sense in light of those goals, and having people that understand what the company’s businesses are makes it easier to go over them and identify the problems and take the steps to correct them on a timely basis. Shaking up the leadership would have the opposite effect in that it would take time for any new executive to learn the current businesses before making any type of decision on what needs to be done to correct them.
While the strategy of Moynihan is sound, it is partly motivated by shareholders, who have in many cases been outraged by the acquisition of Merrill Lynch & Co. last year, which has been a huge drag ever since, and resulted in all sorts of bad publicity and legal problems. This is one of the reasons Moynihan wants to focus on existing businesses and not take on what could be another disaster that would be unknown until they took it over and discovered what they really had.
Of course the government played a dirty role in all this, pressuring CEO Ken Lewis to acquire the company when he was balking at doing it, but then the buck stops with Lewis, and he really should have stock to his guns with it and let someone else inherit the problems that came with Merrill Lynch.
Interestingly, even with all of this, Moynihan maintains Bank of America isn’t too big to manage, responding to shareholders and others who believe the company should be smaller than it is, which would make it more manageable and thus – more profitable.
Managing any type of expectations going forward, Moynihan is very cautious about the prospects of company growth in the U.S., which he says will probably be very sluggish. He’s more than right in that regard, as we’ll see in 2010.
Moynihan said the key for profitability for Bank of America lies in working out the problems associated with credit. I would add it also will be determined by the strength of their international business as well.
