Investing in New York
Bank of America to shift a big part of its 'wealth' operation away from Boston
In the long rivalry between Boston and New York, score another one for the Big Apple.
Bank of America Corp. said yesterday that a big part of its investment management operation will be run from New York City, following the bank's $50 billion purchase of Merrill Lynch & Co.
Merrill executives will hold many key posts, and a prominent figure from Bank of America's Boston leadership, Keith Banks, will be based in New York, overseeing its U.S. Trust private banking business and the Columbia Management mutual funds group.
Both units are now headquartered in Boston, but officials said the company has yet to determine whether the executives who lead U.S. Trust and Columbia will remain in place and, if so, whether they will stay in Boston.
The personnel changes end an era for the wealth management unit, whose leadership Bank of America moved here with much fanfare starting in 2004 - along with about 400 new jobs. Another wealth management executive in Boston, Jeffrey R. Carney, brought in to beef up the bank's retirement services work, jumped ship on Oct. 9 to go to Putnam Investments, a Boston mutual fund firm.
Cornelius Hurley, who directs a banking and financial law program at Boston University, said it seems unlikely that Bank of America would abandon most of its wealth management operations in Massachusetts, whose employees remain among the highest-paid of the bank's 8,000 people here. But, he said, the important business decisions about the operations will be made in New York.
"Usually where the head guy goes, the business goes," Hurley said.
Headquartered in Charlotte, N.C., Bank of America is the largest bank in Massachusetts, with $37 billion in deposits and 309 branches here as of June 30, according to the latest federal figures.
Bank of America agreed to buy Merrill Lynch in September as credit pressures undermined the entire investment banking industry and led to the collapse of Lehman Brothers Holdings Inc. and the retreat of Goldman Sachs and Morgan Stanley, which both registered themselves as bank holding companies.
The personnel moves revealed yesterday were not a surprise. The company in early October made Merrill Lynch chief executive John Thain president of Bank of America's global banking, securities, and wealth management team, which includes the Boston investment operations.
Among the positions disclosed yesterday were Merrill vice chairman Bob McCann, who will head a combined financial adviser organization in New York, and Merrill chief operating officer Greg Fleming, who will head corporate and investment banking. Merrill's vice president of strategy, Peter Kraus, will leave the company, the bank said.
Bank of America put the Global Wealth business in Boston in 2004 following criticism from political leaders, including US Representative Barney Frank, the Newton Democrat who now chairs the House Financial Services Committee, that it was cutting too many local jobs following its purchase of FleetBoston Financial Group for $48 billion.
Yesterday, Frank said he is "very disturbed" by Bank of America's announcements and said he plans to talk to executives there this morning.
"That was a big deal when they put wealth management here, and I'm very troubled" by yesterday's moves, Frank said, noting the approvals the bank received to complete its purchase of FleetBoston Financial. "I'll be reminding them they gave us certain assurances and got some cooperation in return. I'll be very unhappy if this leads to job losses in our area."
Spokesman James Mahoney said Bank of America will maintain its commitments in Massachusetts, including keeping employment close to 8,000 and continuing philanthropic giving at the 2007 level of $12 million.
Mahoney noted the bank recently moved another top executive back to Boston from New York, Brian Moynihan, who now will oversee private equity and operations such as information technology. Moynihan remains one of the top dozen executives reporting to Bank of America's chief executive, Ken Lewis, along with advertising and marketing chief Anne Finucane, Mahoney noted.
"The commitments to Boston are best measured in terms of employment levels, corporate leadership, and contributions to the community," Mahoney said. "By all of those measures, our commitment to Boston isn't affected by this announcement."
Columbia Management, headed to date by Michael A. Jones, includes the bank's Columbia Funds mutual funds unit. It had $423 billion in managed assets as of June 30. U.S. Trust has been headed by Frances Aldrich Sevilla-Sacasa and had $321 billion in client assets on June 30.
As for Banks, Mahoney said he will now be working closer to his primary residence in New Jersey, where he spent weekends.
Still unresolved is what the newly combined company will do with its two private banking units: the U.S. Trust operation and Merrill's First Republic, which had been expanding in Boston prior to the acquisition. First Republic had competed with U.S. Trust, which offers banking services to those with more than $3 million in income that can be invested.
Ross Kerber can be reached at kerber@globe.com. 