The negative reaction to testimony given to the US Congress Tuesday by Brian Moynihan, a leading executive at Bank of America, about the bank’s takeover of Merrill Lynch has led some to count him out of the race for the chief executive’s chair.
Truth is, Moynihan should never have been in the running for the job in the first place.
That is not a reflection of Moynihan’s capabilities. He’s a talented executive with a stellar career within the Bank of America group; he has managed most of the core areas of the bank: wealth management, investment banking and, most recently, the consumer business. At any other time, his CV would mark him out as an outstanding candidate for the role.
But the last thing chairman Walter Massey and his board need as a successor to outgoing Ken Lewis is another pugnacious Bank of America lifer who rubs politicians the wrong way.
Indeed, strong arguments can be made against the credentials of all of the internal candidates for the role at this time. Tom Montag, head of the investment bank, has no experience of consumer banking, still the core of BofA’s business. Sallie Krawcheck, head of wealth management, is barely through the door and does not yet have the necessary gravitas or experience for the top role.
Greg Curl, the chief risk officer and apparently Lewis’s pick for the job, has experience and a good overview of all parts of the business. But in his previous role as head of strategy he was Lewis’s key dealmaker, and is thereby tarnished by his involvement in the detail and timing of the takeovers of Merrill Lynch and Countrywide. Moreover, he lacks operational management experience.
No, Bank of America needs an outsider. But the job requires more than just a new face – it needs an experienced banker with a particular set of the skills to meet the challenges that the new chief executive will face.
The right candidate needs political connections and instincts. Bank of America is likely to remain a whipping boy on Capitol Hill for the foreseeable future.
The next CEO needs to join in the discussion with regulators, rather than fight against them.
He or she needs to be skilful in the art of public relations. Bank of America is public property in the US. Close on 50% of households in the country have some sort of dealings with the bank. That’s one of the reasons for the level of vitriol directed towards Lewis by the man and woman on the street.
It would help if the winning candidate were already independently wealthy. They will have to work incredibly hard for relatively little financial reward, at least in terms of salary.
Finally, in an ideal world, the new chief will have experience of running a universal bank, or at least direct management experience in at least two out of three of wealth, consumer and wholesale banking.
It’s no wonder the bank’s search committee is seemingly having so much trouble with first finding and then attracting external candidates. The likes of Barclays president Bob Diamond and BNY Mellon’s Robert Kelly have reportedly said they are not interested.
One name emerged last week that might fit the bill. Jon Corzine says he has not spoken to BofA about the role. That may be because he still has a job, but not for much longer. He recently lost a vote for re-election as governor of New Jersey.
It may seem unlikely that Bank of America’s board would swap a failed banker for a failed politician, yet Corzine fits most of the bank’s criteria. Of course his position as a Goldman Sachs alumnus would add fuel to the fire of those who question why so many of that investment bank’s former employees are running bailed-out US institutions.
A figure such as Corzine, who is 62, can deal with the pressing public-facing issues, which Bank of America must address over the next two to three years. He can rely on a strong bench of executive talent beneath him in Moynihan, Montag and Krawcheck. The best of those three would be the clear internal candidate to succeed Corzine when his job was done.
But don’t hold your breath. The Bank of America succession has turned into a monumental cock-up for which no one involved deserves any credit. Lewis was forced out earlier than expected, and his departure leaked before a succession could be put in place. The process has reached such farcical proportions that there are now rumours Lewis may be asked to stay on beyond the end of the year.
BofA says it will have a successor announced before Thanksgiving. Whether or not beleaguered BofA shareholders will be giving thanks for the name the board conjures up remains to be seen.