13th June 2024

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Business Industry and Financial

Bank of America Targets Middle Market to Expand Investment Banking in Europe

(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.”

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