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BofA chief has change of heart

Kenneth Lewis affirms his commitment to the investment bank unit.

June 12, 2008|From Bloomberg News

Bank of America Corp. Chief Executive Kenneth D. Lewis, who had vowed to scale back the company's investment bank last year after profit evaporated, affirmed his commitment to the unit and said this quarter might be among its most profitable.

"I feel so much better now about our investment bank than I did, say, a few weeks ago, a few months ago," Lewis said Wednesday. The current quarter could be "one of the three or four best investment banking quarters that we've had."

That's a change in tone from last October, when Lewis said he'd had "all the fun I can stand" in investment banking as the unit posted a 93% plunge in third-quarter profit. Lewis has since said he regretted the comment, adding Wednesday that clients began to doubt that the bank was committed to the business.

"We've narrowed down the focus on what we're really good at," Lewis, 61, said. Changes included cutting almost a fifth of the investment bank's 5,900 employees and Tuesday's sale of its prime brokerage, which caters to hedge funds, for $300 million to BNP Paribas, France's largest bank.

Bank of America is taking advantage of the worldwide credit crunch to hire bankers from faltering rivals, said Brian Brille, global head of investment banking. The Charlotte, N.C., company recruited eight executives from Bear Stearns Cos. and Morgan Stanley in the last six weeks, including David Glaser, co-head of investment banking at Bear Stearns, Brille said.

The new bankers, who specialize in media, technology, financial sponsors and healthcare, join Bank of America after the world's biggest financial companies, including Lehman Bros. Holdings Inc., UBS and Citigroup Inc., dismissed more than 83,000 people.

"It's harder to acquire this sort of talent during periods of bull markets," said Brille, who joined Bank of America from Morgan Stanley in 1999.

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