MOYNIHAN: Bank of America ‘left a hole’ in the US dealmaking market

Bank of America CEO Brian
Moynihan.
AP Images / Richard
Drew

• Bank of America Merrill Lynch is adding bankers to capture
  more middle-market deals in the US, CEO Brian Moynihan said
  Tuesday.
• Moynihan said the bank left a hole in its high-end midsize
  deals coverage in US and lost market share, contributing to the
  firm’s decline in investment banking revenues in 2018.
• Investment banking revenues slipped 20% in the first nine
  months, and Bank of America dropped from 4th to 9th in the US
  M&A league tables. 
• “We’ve got to come back and take our deserved share out
  of the US. That’s where the opportunity is and they’re after
  it. And we feel good — we’re seeing it come through,” Moynihan
  said. 

Bank of America Merrill Lynch has had a rough year in investment
banking, as revenues have declined and group head Christian
Meissner
announced his departure in September. But the company
believes they’ve diagnosed the problem and are on their way to
correcting it.

The solution, according to CEO Brian Moynihan: adding bankers to
win back middle-market mergers-and-acquisitions revenues in the
US, an area the bank overlooked and lost market share in. 

Speaking at a financial conference on Tuesday, Moynihan said his
firm is “adding some capacity” to go after the higher end of
middle-market investment banking, an area where the bank wasn’t
claiming as much of the market as he thought it should
have. 

Read more:


A wave of senior departures, lost market share, and a 20% drop in
fees: A dismal year in investment banking at Bank of
America

Through the first nine months of 2018, investment banking
revenues declined sharply, falling 20% from $2.7 billion to
$2.1 billion. That led Moynihan and CFO Paul Donofrio to call out
the division on second- and third-quarter earnings calls,
saying “we can do better.”

The US market was the epicenter of the pain, particularly in
M&A. While the bank
crushed the competition in IPOs, it fell to 8th on the league
tables in US M&A fees through the first three quarters,
down from fourth in 2017, according to Dealogic. That puts
them behind smaller competitors like Barclays, Jefferies, and
Credit Suisse.

Moynihan pinpointed the dwindling market share in the US on
mid-size transactions, saying the firm left a gap in its
investment banking coverage.

“What we observed I think largely was as we really
fine-tuned the quote customer list, coverage list, we may have
left a hole in the United States. So we’ve been feeding back into
that hole,” Moynihan said. 

While the firm’s coverage of the higher end middle-market
deals improved elsewhere in the world over the past five to seven
years, it fell by the wayside in the US. Moynihan said Matthew
Koder, Meissner’s replacement as head of the corporate and
investment bank, is working on filling out that team to steal
back their fair share of deals.

“We’ve got to come back and take our deserved share out of
the US. That’s where the opportunity is and they’re after it. And
we feel good — we’re seeing it come through,” Moynihan
said. 

Get the latest Bank of America stock price here.