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Bank of America chief faces skeptics

By Nelson D. Schwartz
New York Times / September 12, 2011

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NEW YORK - Like a magician facing a weary audience, Bank of America faces pressure to pull another rabbit out of its hat.

In just the last few weeks, the company has announced a management shake-up, a $5 billion investment by Warren E. Buffett, and the sale of more than $15 billion in assets. None of those major news events have propped up the bank’s battered stock, which finished last week at just less than $7 a share - down nearly 30 percent since the beginning of August.

Today, Brian T. Moynihan, the bank’s chief executive, is scheduled to deliver a much-anticipated address to investors at a conference hosted by Barclays in New York, but anything less than a bold new blueprint is likely to leave already-frustrated investors grumbling.

“He’s got to say something new, otherwise it’ll be a real dud,’’ said Chris Kotowski, an analyst with Oppenheimer. “There’s a lot of cynicism. People are going to be skeptical of any numbers they put out.’’

Moynihan will unveil the initial results of the bank’s Project New BAC restructuring initiative, named after its stock ticker symbol. That plan will increase targets for quarterly cost savings to well above the $1 billion to $1.5 billion goal he laid out last month. Moynihan is also expected to note that the streamlining, which could cost 30,000 to 40,000 jobs in the next three years, will affect the executive suite, too. Last week, the company said the reshuffling did not leave room for the positions held by two top executives, Sallie Krawcheck and Joe Price.

Bank of America officials declined to comment on the contents of the speech. Two other top executives who are at the heart of Moynihan’s team, Bruce R. Thompson, the chief financial officer, and Mike Lyons, head of corporate strategy and planning, played critical roles in putting together the presentation. Moynihan is likely to emphasize that Bank of America is sticking with the diet he imposed on it after taking over in late 2010, while cleaning up after the acquisition binge begun by his predecessor, Kenneth D. Lewis.

Moynihan is expected to detail the bank’s current capital structure, reiterating his desire to strengthen the company’s balance sheet further without having to resort to selling more stock, a major worry among Bank of America shareholders.

He is also likely to emphasize that the asset sales in the third quarter have replenished capital that was consumed by the cost of settling mortgage-related litigation in the second-quarter.