Bank of America CEO Moynihan has no plans to leave

4 minutes
Bank of America CEO Moynihan has no plans to leave

In 2010 - when Brian Moynihan took over the reins at Bank of America Corp, the U.S. bank was reeling.

His major company suddenly moved to bankruptcy as scandals and investigations related to a former acquisition unveiled. Its stock price was growing, and the global financial crisis was still strong.

Since then, Moynihan, 61, has not only transformed the ship but legalized Bank of America, leaving analysts, industry people and some investors wondering what will be next to them.

Moynihan has no imminent plans to leave, but as his tenure moves on, so will the mystery of who will replace him. Those who were mature front runners have grown too old, while those recently promoted to Bank of America's management committee are too clear-faced.

That leaves Moynihan with a new challenge over the next few years: deciding who would best replace him and marketing that person to the world without alienating other top managers.

Who is a CEO and the place in which they sit is not a minor thing, said Sydney Finkelstein, professor at Dartmouth's Tuck School of Business.

Ken Lewis's predecessor, Moynihan, left after months of public drama and decisions that resulted in criticism from the lawmakers, regulators and investors, noted Finkelstein. Although Finkelstein has the bank on a much better footing, he has been there long enough for constituents to want a road map for the future, Moynihan said.

He said that you won't leave the bank in a mess like that. What are you planning on doing?

Moynihan was not available to respond in an interview, stated a spokesperson who declined to comment for this story.

It is not unusual to have leadership voids at companies with relatively fresh CEOs who want to groom deputies over 5- 10 years old. The situation is less common at companies with CEOs who have been in place for a long time and have effectively executed their visions, sources said.

Of the six largest U.S. banks, Bank of America is the only one to have updated CEOs in recent years or outlined a relatively clear succession plan lately.

Circumstances are different at each institution. But it leaves Moynihan as the longest tenured executive on Wall Street who has not offered a crisp idea of who will be next, said analysts.

Until now, Jeffery Harte wanted to see through the changes that he spearheaded, said Piper Sandler analyst Brian Moynihan. But now he has done this.

The perfect successor would be now 45-55 years old, have experience leading different parts of the Bank of America's eight businesses, be comfortable with regulators and understand the social purpose agenda of the bank, said several recruiters.

But that leaves no obvious internal candidate for him to follow them.

Now that he has four or five years of runway left, investors should rightfully say Hmmm', said one bank employee.

The Board of Directors takes succession planning seriously and has the topic on its agenda, said a different person who was familiar with the board's thinking. The Board met twice this year to discuss the topic.

They spoke on condition of anonymity to discuss professional issues or avoid confidential consequences for speaking to the press.

Steve Boland mentioned several Bank of America executives as contenders : Raul Anaya, Dean Athanasia, Jim DeMare and Andy Seig. They said that Mike Lyons and former SunTrust executive Mark Chancy are also possible.

No. 0: Moynihan 2, Tom Montag, could take charge if his boss forced to leave immediately. But in the 64th year, Montag is not seen as a long-term CEO candidate.

'RESPONSIBLE GROWTH' Few expect Bank of America to outline a detailed succession plan any time soon, but a prolonged search can be risky because the best people may grow impatient and leave, sources said.

Moynihan won his own succession battle partly because of his law skills. He spent years resolving hairy regulatory inquiries and litigations, including a $37 billion settlement in 2014 with the Justice Department.

He also set his sights on the cost-cutting and integrating a tangle of businesses that created Bank of America from deals over two decades.

Moynihan's strategy helped Bank of America create last year a $16.5 billion profit and 6.8% return on equity despite the coronavirus pandemic compared to a $6.8 billion profit and a 0.3% return on equity in 2009. Its share price was less than $43, compared with $16 when Moynihan took over the head of the company.

As the global economy recovers from COVID 19, and business starts to recover, analysts expect the bank to do even better.

Investors like Moynihan have embraced Warren Buffett's mantra of responsible growth. Buffett has sold nearly 12% of the Bank of America shares in three major segments, while accumulating at rivals.

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