Bank of America Corporation’s (BAC) new chief executive officer (CEO), Brian T. Moynihan, said on Monday that he anticipates a sluggish and prolonged recovery of the U.S economy. He also expects a high unemployment level in the near term.
According to the CEO, de-consolidating the banking sector would be a mistake, but the financial services industry should abide by the regulatory changes which helped stabilize the economy to a great extent.
With respect to BofA, the market turmoil was more harmful compared to its peers. However, BofA has concluded its biggest acquisitions. BofA acquired brokerage giant Merrill Lynch almost during the height of the financial crisis last year. It also acquired Countrywide Financial Corporation on Jul 1, 2008.
The CEO views these deals as beneficial for stakeholders of the company. Furthermore, this will allow the bank to focus on rebuilding customer relationships.
Though BofA’s earnings benefited from the profit generated by its wealth management business, the company experienced continued net interest yield compression and credit quality deterioration. Additionally, the company is facing problems over litigation issues related to the Merrill Lynch acquisition. We think the new CEO should focus on the integration of Merrill Lynch and smooth relations with regulators.
Since the end of 2009, BofA is absolutely free from pay restrictions as it has repaid in full the $45 billion government bailout money. We also anticipate continued synergies from the company’s large scale operation and balance sheet restructuring.
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