(Bloomberg) — Bank of America Corp. is hiring and investing abroad to expand its investment-banking operations for middle-market clients as some of its competitors retreat, according to Chief Executive Officer Brian Moynihan.
The focus is on Europe, “where there is opportunity for us to deal with the next size down,” Moynihan said in an interview from his hometown of Wellesley, Massachusetts. “We invest balance sheet, invest capital, invest in people and places.”
Several US firms are looking to scoop up talent and gain market share left behind in the wake of Credit Suisse’s takeover by UBS Group AG in June. As global mergers and acquisitions remain muted, firms have trimmed staff to navigate the slump. Bank of America is still hiring or moving staff, and has found dealmaking opportunities among middle-market firms to help counter the drop.
As part of the expansion, Bank of America named Lesley White head of international middle-market strategy, according to a memo seen by Bloomberg News Monday.
White will “focus on developing and executing on our strategy for this important client segment of ours,” Bernie Mensah, the bank’s president of international, said in the memo, which was confirmed by a Bank of America representative. White has spent more than 35 years with the bank, most recently in a stint as chief operating officer of the sustainable-markets initiative.
Bank of America’s focus on the middle market — which it defines as companies with annual revenue of up to $2 billion — helped the investment bank notch more than $1 billion in fees last quarter, producing better returns than analysts’ estimates and holding the bank’s position relatively flat in a down market.
“We believe our continued investments in bankers around the world” and focus on the middle market in the US is fueling the outperformance, Chief Financial Officer Alastair Borthwick said earlier this month.
The bank more than doubled its team of bankers serving middle-market clients in the US last year, urging some staffers to take new roles serving those clients to match rising demand. Charlotte, North Carolina-based Bank of America isn’t alone in betting on European middle-market companies for growth. Citigroup Inc. and JPMorgan Chase & Co. have both built out their commercial banks in Europe in recent years, encroaching on the turf of European rivals.
Smaller Workforce
Even with Bank of America’s new investments, Moynihan said the company will continue to reduce its workforce, pushing headcount down as attrition has slowed to 6% in recent months. The bank employs about 213,000 people, down from almost 217,000 at the end of 2022.
“If a person can go work somewhere else, or quit, we just don’t fill” the position, the CEO said.
Read More: BofA Plans to Again Double Dealmaking Team Serving Middle Market
As the investment-banking unit led by Matthew Koder gets busier serving larger companies in deals and issuance, the team will have to respond accordingly and hire more, Moynihan said. “But the first order was to move the people across” to the middle market, where “the environment was already busy.”
Geopolitical tensions, inflation and periods of market volatility have caused firms to pull back from dealmaking across the globe. Moynihan said there are still signs of caution among employers, despite a resilient economy.
Businesses are “a little more conservative right now than they were,” he said. “They are worried and wonder — can it really be OK? But they’re still making money, they have lots of credit availability.”
An upcoming US election, wars in Ukraine and Israel, and tensions between the US and China are all potential risks on the horizon, he said, but nothing that his bank or corporations haven’t dealt with before. The chief executive spent a week in Davos, Switzerland, for the World Economic Forum, speaking with executives from some of the world’s largest corporations and global leaders, including Ukrainian President Volodymyr Zelenskiy.
“You sit there and say, ‘Are you worried about everything?’ The question is then how do you deal with that?” he said. “It’s resiliency and balance, and the things you do to make sure the company’s not in a position where anything would affect it too much.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
