CHICAGO — Charlotte-based Bank of America Corp. has scaled back its Midwestern presence by firing senior bankers in Chicago and St. Louis and, separately, it dismantled its affordable housing group as part of an overhaul of its investment banking business, sources said.
The extent of the public finance cuts was unclear as Bank of America representatives declined to provide details as to how many positions were eliminated or in what regional offices, referring instead to a statement released Jan. 15 announcing the elimination of 650 positions in its larger global markets and investment banking businesses.
Phil Smith, head of public finance for the firm that ranked ninth among senior managers last year nationally, also did not return a call seeking comment. A spokeswoman did say the bank would continue to do affordable housing, although several sources said the firm dismantled the existing group, laying off four bankers and reassigning one to the traditional housing sector.
“I can tell you it would be inaccurate to print that we eliminated affordable housing,” the spokeswoman said “Public finance capabilities are key to meeting the needs of our governmental and not-for-profit clients and we are committed to servicing the needs of this important segment.”
The firm portrayed the larger changes as part of a strategic reassessment announced last fall to reflect market changes, including a focus on “areas of traditional strength” in investment banking and a reduction in its activities in collaterized debt obligations.
“These changes will sharpen the focus of our capabilities and activities on the needs of our clients,” the bank’s chief executive officer Kenneth D. Lewis said in a statement. “We should emerge from this realignment with profitable and more competitive global markets and global investment banking businesses. We’re committed to that, and it is important to our success.”
The firm joins other regional banks and its Wall Street counterparts in eliminating jobs and retooling capital markets amid massive losses due to the collapse of the subprime mortgage market and other factors including growing fears over the economy.
Bank of America, the nation’s second largest commercial bank, announced last week that its fourth quarter earnings fell 95%. The bank had previously announced 3,000 job cuts as its capital markets arm struggled with fallout from losses related to its exposure to collateralized debt obligations that included subprime mortgage securities.
Despite the losses and speculation internally about the bank’s future in municipals, sources in the public finance group of Banc of America Securities LLC said the news last week that jobs were being cut was unexpected. Two former employees said those being fired were informed between Wednesday and Friday of last week.
“The bank had a bad year and was going through a restructuring is what we were told and they were going to be contracting the size of public finance,” said one former banker.
The bank “has lost a lot of money … there’s a lot of nervousness among people here, they don’t know if that’s the end” of the cuts, said one public finance source.
The firm ranked ninth nationally for the last three years among senior managers with $17.1 billion of bonds managed for 4% of market share, compared to 4.6% a year earlier, according to Thomson Financial. The firm ranked 10th last year in the Far West with $3.2 billion of deals, 14th in the Midwest with $1.7 billion, 10th in the Northeast with $2.9 billion, third in the Southeast with $7 billion, a stronghold, and 11th in the Southwest with $2.2 billion.
The reductions will reduce the broker-dealer’s presence in its Midwestern offices in Chicago and St. Louis. In Chicago, veteran higher education and cultural institutions banker Kenneth Kerznar, a managing director, was fired, along with analyst Jeremy Newtson.
It was unclear if two other members of Kerznar’s group, Michelle Salomon and Jason Borman, or banker Kathleen Reicher remained on staff. The firm did not cut senior general government banker Neil Pritz, or Ivan Samstein, who was one of few retained by the bank following its acquisition last fall of LaSalle Bank Corp. Health care banker Jeff Seubel also remains.
Kerznar had joined the bank two years ago after resigning from JPMorgan. He had worked for several decades for Banc One Capital Markets Inc., which was acquired by JP Morgan. He brought Salomon and Borman with him to Banc of America from JP Morgan.
In St. Louis, the firm fired Richard Ryffel, the bank’s Midwest team leader and a prominent local banker who had previously worked at A.G. Edwards & Sons. Bank of America has considered itself a hometown bank in St. Louis as it established a presence in the city with the 1998 marriage of local bank NationsBank and Bank of America. The merged company eventually moved its sales and trading operations to Charlotte. It was unclear if a handful of other bankers and staff remained or if the bank had shuttered the office as some speculated.
In New York City, the firm cut Todd Gomez, head of a five-person affordable housing team. Gomez had joined the firm three years ago after serving as chief financial officer for the Chicago Housing Authority. Members of the group laid off included New York City-based banker Joseph Barrette, San Francisco-based banker Joe Litton, and a Tampa-based banker while San Francisco-based Ila Afsharipour was moved over to the traditional housing group.
“They will still work on traditional state housing authority deals but they don’t want to work on multi-family deals where you have to put up more capital,” said one source. “They are moving away from those businesses.”
It was not yet know if any sales, traders or underwriting professionals also lost their jobs. Sources said the Texas and New York offices also saw additional layoffs, but specifics of any cuts could not be confirmed.
Ted Phillips contributed to this story.