Magazine article American Banker

Are Investor Relations Behind B of A Shake-Up?

Magazine article American Banker

Are Investor Relations Behind B of A Shake-Up?

Article excerpt

Bank of America Corp. surprised some on Wall Street on Thursday by naming Alvaro G. de Molina chief financial officer and saying that Marc Oken, who had been the CFO for just 17 months, is retiring.

The change capped what some analysts saw as a tumultuous summer for the two men. It follows criticism that the Charlotte company has been too reliant on securities gains in the past and that it overmanaged its balance sheet in the second quarter.

Several analysts said the management change, which went into effect immediately, is a good investor relations move for B of A.

Joseph Morford at Royal Bank of Canada's RBC Capital Markets said the switch should give the company "a bit more credibility" with investors, particularly in explaining its asset-liability management strategy.

Piper Jaffray & Co. analyst Andrew Collins said in a note to clients that replacing Mr. Oken, 58, with Mr. de Molina, 48, appeared to be a "decision to improve communication with the investment community."

Mr. de Molina, who had been Banc of America Securities LLC's chief executive, said in a conference call that he believed that B of A was pleased with its past relationship with investors, but was also dedicated to improving "transparency and communication" with outsiders.

"We want to give investors what they need to understand what's going on in our business," he said.

A spokesman said that Mr. Oken and B of A chief executive Kenneth D. Lewis would not be available for comment.

This is the second major change in a month and a half for Mr. de Molina. On July 28, B of A combined its corporate and investment banking division, which he had been running, into its commercial banking operations. That meant Mr. de Molina no longer reported directly to Mr. Lewis, and some saw the move as a demotion.

Some analysts said that Mr. Lewis, who was largely out of the spotlight in August, might have had Mr. de Molina in mind for the CFO position when the company announced the business-line reorganization earlier this summer. As CFO he again will report to Mr. Lewis, who is also Bank of America's chairman and president.

"I would think that such a game plan was probably well known to senior management" at that time, said Frank Barkocy, the director of research at Keefe Managers LLC, a fund manager that focuses on banking. "It should be an orderly transition," he added.

Mr. Oken, who led B of A's transition after it bought FleetBoston Financial Corp., will remain with the company through early 2006. Mark Werner, a global markets executive, is Banc of America Securities' new CEO.

B of A, which has assets of $1.2 trillion, reported second-quarter profits of $4.3 billion, down 8.5% from the first quarter but 12% higher than a year earlier. But the quarter was in part aided by $325 million of securities gains and $278 million of gains from the sale of whole loans. …

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