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Banking

Abigail Hofman: Lucky Montag

Revenue from Montag's inherited empire, BofA's global banking and markets, is mixed but Mongag looks lucky.

There is one senior Bank of America banker who has turned out to be very lucky indeed: Tom Montag. Montag, who had a successful career at Goldman Sachs, rising to be co-head of the securities division, was recruited by John Thain, then head of Merrill Lynch, to run sales and trading in mid-2008. Montag enjoyed a lengthy period of gardening leave and couldn’t start work at Merrill until August 2008. He was rumoured to have negotiated a princely contract – approximately $90 million – to sort out Merrill’s toxic portfolio. In my own mind, I have rechristened Montag, "Monty". According to the Compact Oxford English Dictionary, Monty (as in "the full monty") has the informal meaning of: "the full amount expected, desired or possible".

Six weeks after Monty was installed in his spacious corner office, Merrill was gobbled up by Bank of America. A mole murmurs that Montag’s contract might have had a clause stating that his reporting line should always be to the chief executive. When Thain was fired, Moynihan took over as chief executive of the investment bank but Montag, as global head of markets, reported directly to Ken Lewis, which made no sense. When Moynihan moved to the consumer bank, Montag stepped up to run the whole investment banking division. I doubt anyone could have foreseen these circuitous events. Within 18 months of joining the firm, Monty had lost his boss (Thain) , lost his new firm (Merrill) , acquired a new boss and lost him (Lewis) and then acquired yet another boss (Moynihan). However, he inherited an empire and is presumably still extremely well paid. Montag is now Bank of America’s president of global banking and markets. This makes him one of the four most powerful men on Wall Street. The other "players" are Jamie Dimon of JPMorgan, Lloyd Blankfein of Goldman Sachs and James Gorman of Morgan Stanley.

And the results in the Montag world were mixed last year. The global banking division includes commercial banking (which reports to David Darnell not to Montag) as well as corporate and investment banking, and had net income for 2009 of $3 billion, down from $4.4 billion in 2008 because of increased credit losses and higher FDIC insurance. The statement mentions that investment banking had revenues of $5.6 billion for 2009 and this was shared between the global banking division and the global markets division. The global markets division (the FICC and equities trading businesses), reported net income of $7 billion for 2009, a big improvement on the $5 billion loss for 2008. Revenue for the year in the fixed-income, currency and commodities division was $14.9 billion and 2009 equities revenue was $5.7 billion. In comparison, Goldman Sachs achieved 2009 net earnings of $13.39 billion and its FICC division generated net revenues of $23.3 billion while equities made $10 billion in revenue. Goldman’s investment banking revenues, however, were down year on year at $4.8 billion. Before the crisis, all investment banks measured themselves against the Goldman standard. Today, despite a very different banking landscape, this is still the case.

More Abigail with attitude

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Thain, Mrs Tarp – where are they now?

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Too Big to Fail, or, hissy fits and enormous egos 

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How was your month? Please send news and views to Abigail@euromoney.com

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