In a major strategy shift, BankAmerica Corp. said Monday that it will place its mutual fund, investment management and retail brokerage units under one umbrella, and it named an outsider to head the new group.
BofA's move, which comes five months after two of its money market mutual funds suffered large derivative-securities-related losses, is aimed at re-energizing the investment business and bringing new investment products and services to customers through its far-flung branch system.
Despite BofA's size, it has lagged many of its bank competitors in developing mutual funds and other non-bank, higher-risk/higher-return investment options for an increasingly sophisticated public.
BofA chose Alexander Anderson, who had been executive vice president of rival Wells Fargo & Co.'s investment management group, to head the new "investment management services group."
Anderson, 45, will oversee BA Investment Services, the firm's brokerage subsidiary that sells investment products in 1,500 branches in seven Western states; the bank's $30-billion investment management and research unit, and the $10-billion Pacific Horizon Funds, BofA's 16 proprietary mutual funds.
Those operations, and the new umbrella unit Anderson will run, are based in Los Angeles, though BofA's headquarters are in San Francisco.
Anderson had been at Wells for the past eight years, where he directed the bank's personal trust business, private banking, institutional investment management and proprietary mutual funds, the Overland and Stagecoach funds.
In an interview, Anderson said BofA's extensive branch network and corporate banking presence in the West offers "huge potential" for development and marketing of in-house investment products.
He said he has the "full commitment" of BofA CEO Richard Rosenberg to expand the bank's presence in the investment arena.
Some analysts say that until now, Rosenberg had been lukewarm to the idea of making BofA a strong player in mutual funds and other non-bank investment products, and to the use of BA Investment Services as a distribution system for BofA's own products.
"The interest on the part of senior management wasn't" there, said Geoff Bobroff, a mutual fund industry consultant.
BofA's mutual fund assets total $10 billion, with much of that in money market funds. Wells Fargo's fund assets, while about equal to BofA's, are spread across more than two dozen funds, including a variety of stock and bond funds.
"Wells has been innovative in developing new funds," Bobroff said, though he said many of those funds are still young and untested.
BofA's investment business, much of which came to the bank in its 1991 merger with Security Pacific Corp., has suffered from a number of management changes over the past year, and it endured a black eye in the spring when the bank paid $68 million to make up for derivative-securities losses in two of its money funds. It was one of many fund sponsors forced to cover derivative losses.
Asked if he feared that he was taking the job at what may be a peak for the investment industry--as stock and bond markets suffer from rising interest rates--Anderson said he considers the current environment just a "cyclical slump" in a long-term trend of rising public demand for more sophisticated investments.