CHICAGO - Charlotte, N.C.-based Bank of America Corp.'s longtime public finance head Phil Smith resigned Tuesday to accept an offer to join the firm's neighbor and rival, Wachovia Corp., numerous public finance sources said yesterday.
Bank of America representatives could not immediately confirm Smith's departure, although callers to his office were told yesterday he was no longer with the firm.
Representatives of Wachovia, also based in Charlotte, did not return calls to confirm that Smith had taken a position with the firm. Several sources, however, said Smith resigned from Bank of America early Tuesday despite the firm's efforts to persuade him to stay.
Sources said Wachovia, which acquired St. Louis-based A.G. Edwards & Sons Inc. last year, disclosed in a conference call with employees that Smith had accepted a position at the firm to serve as a liaison between the public finance group that operates under the Wachovia Securities LLC name and the commercial banking operations. He is scheduled to start as soon as May after a grace period, sources at the firm reported.
Smith, a 20 year veteran of Bank of America, had grown increasingly frustrated in his position, sources said, having reported to six different managers over the last five years.
The firm's broker-dealer Banc of America Securities LLC, which ranked ninth last year nationally among senior managers, recently scaled back its Midwestern presence by firing senior bankers in Chicago and St. Louis and, separately, dismantled its affordable housing group as part of an overhaul of its investment banking business. They were part of the elimination of 650 positions in its larger global markets and investment banking businesses.
The firm had 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. The firm was following other regional banks and 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, last month reported its fourth-quarter earnings fell 95%. The losses and layoffs sparked speculation that the firm would be pulling back from its municipal business.
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.
National rankings show Wachovia ranked 12th in the nation in 2007, working on 468 issues for a total amount of $10.7 billion in par amount. In the Northeast in 2007, Wachovia ranked 11th in the nation, working on $2.2 billion in 116 issues.
In the Southwest, Wachovia ranked 16th managing 70 deals worth $1.2 billion. Wachovia ranked 8th in the Midwest on 152 deals worth $2.7 billion. In the Southeast, the firm ranked 8th in the region, on $3.9 billion in 116 issues. And in the Far West, Wachovia ranked 16th, working on $716 million in par amount, and a total of 14 issues for the year.
Wachovia last year acquired A.G. Edwards in a $6.8 billion stock and cash deal. The deal created a retail-brokerage presence with $1.1 trillion in client assets and almost 15,000 financial advisers. The combination of Wachovia and A.G. Edwards lifted the firm to second nationally in terms of the number of registered representatives in its network and third in the nation based on client assets.
Wachovia reported a sharp drop in its fourth-quarter net income of $51 million.
Caitlin Devitt contributed to this story.