Tom Montag is often regarded as a holdover from a bygone era when aggressive traders dominated Wall Street banks. He is rarely described in the media without the accompanying epithet “hard-charging”, while profiles often stress his brusque manner and imposing frame.
That image is incomplete. The derivatives business Montag helped to build at Goldman Sachs in New York in the 1990s deployed novel trading techniques to outperform much bigger banks. A stint in Japan was also a success and Montag was global co-head of securities at Goldman by the time he left in 2007, before overhauling trading and investment banking at Bank of America after his arrival in 2008 when the firm bought Merrill Lynch.
Bank of America’s farewell to Montag gave as much space to his role developing sustainable finance and sponsoring diversity and inclusion initiatives as it did to his achievements in sales and trading. That was arguably over-correcting in response to the perception of Montag as a relic of a former age.
The language in the Bank of America release may be a delayed riposte to a profile of Montag in the New York Times in May that accused him of insensitivity – including towards female staff – and prompted speculation that his departure could not be too far away.
However, it also reflects the almost robotic way in which major banks now cite their sustainability, diversity and inclusion credentials.
This might seem harmless enough. But a reported investigation by US regulators into Deutsche Bank’s DWS asset management arm for misstating its sustainability criteria highlights the legal and reputational risk for financial firms of overdoing their promotional efforts.
The loyalty that Montag inspired in many of his subordinates – and resentment about supposed favouritism among some others – could easily cause disruption when succession plans are announced
And in the case of Montag, there is a risk of presenting a picture that is no more complete than his media portrayal as the last of the trading mastodons.
Brian Moynihan, the Bank of America chief executive who has often seemed overshadowed by Montag – and was for many years paid less than his nominal deputy – managed to insert a more accurate assessment at the end of the release announcing the changing of the guard at the bank.
“Tom joined the company during one of the most challenging periods in financial services history and skilfully steered the business to be one of the few financial institutions that can help clients raise cash, move money, expand into new markets, and manage risk in every major market around the world,” Moynihan said.
Succession challenge
Now that the language of the press release announcing the departure of Montag and Finucane has been negotiated by all interested parties, Bank of America can turn to the challenge of their replacement.
Finucane made an important contribution to Bank of America’s recovery after the 2008 financial crisis by reviving its brand image and reputation.
She does not oversee revenue-producing divisions at the bank, however. Montag’s global banking and markets groups were responsible for 46% of the firm’s revenues in the first half of 2021 by contrast – an increase from 36% in 2009, as BofA’s release noted, perhaps at his insistence.
The loyalty that Montag inspired in many of his subordinates – and resentment about supposed favouritism among some others – could easily cause disruption when succession plans are announced by Bank of America “in the coming weeks.”
Montag’s main responsibility of global banking and markets could be split between Matthew Koder, head of corporate and investment banking, and global markets chief Jim DeMare. However, Koder might feel that his longer experience in management merits a senior billing. And the future of Montag loyalists such as head of fixed income sales Sanaz Zaimi will be closely watched.
Another carefully worded press release will no doubt try to resolve these issues.
