Bank of America to hire staff for deal-making team in Asia

Bank of America Corporation (BofA) plans to recruit about 50 officials for its investment banking team in Asia this year. The bank pushes to bolster its deal-making business and shore up revenues from the unit.

Bank of America’s Asia headcount expansion comes against the backdrop of a subdued recruitment outlook for the broader investment banking business as global lenders grapple with cost pressures and slowing M&A momentum.

A third of BofA’s new hires in Asia will be senior bankers, including managing directors, for its merger and acquisitions advisory and capital markets businesses, mainly in Hong Kong, Singapore and Australia, the people told Reuters.

BofA’s hiring tally for the year could change depending on the deals’ momentum, said two of the people, who spoke on condition of anonymity as the plans are still confidential.

A BofA spokesman in Hong Kong declined to comment.

Deals involving Asia-Pacific firms worldwide fell in 2019 amid the U.S.-China trade war and tighter regulatory scrutiny. But after a Phase 1 agreement between the world’s two biggest economies, trade tensions have eased, which should bode well for dealmaking.

Bankers see Chinese state-owned companies playing a major role in dealmaking in 2020, and expect large floats including a potential listing of Ant Financial, an Alibaba affiliate, to buoy capital markets activity.

With the renewed focus on investment banking, BofA is aiming to break into the top four of Asian investment banking advisory league tables in the next few years, the people said.

“The bank’s coverage footprint (in Asia Pacific) is smaller than bigger rivals,” one of the three people said, adding BofA’s hiring has to increase to reduce the gap in coverage of industrial sectors and clients in the region.

BofA is the second largest bank in the United States, with consumer banking its biggest business.

BofA’s recruitment drive for the investment banking unit comes as it struggles with falling market share and revenue, as well as a string of departures of senior leaders in the United States and Asia in the recent past.

The Wall Street bank promoted its Asia Pacific president Matthew Koder to global head of corporate and investment banking in late 2018 and tasked him with revitalising its corporate and investment banking business.

Koder, an Australian who started out at Goldman Sachs in the mid-1990s, has made significant changes to the business in the past year and stepped up hiring in the bank’s home market as well as in Europe.

In Asia, senior hires in 2019 included Patrick Steinemann, who came on board as BofA’s head of industrials investment banking team, while Monica Chang joined the China coverage team from Deutsche Bank.

Overall, BofA expanded its investment banking headcount in Asia last year by hiring about a dozen senior bankers, making it one of the most aggressive recruiters among other global banks in the region, one of the people said.

The Charlotte, North Carolina-based firm reported a 9% rise in investment banking fees in the fourth quarter ended December to $1.5 billion, on higher income from debt and equity underwriting deals.

BofA was third in the Asia Pacific M&A advisory league table including Japan in 2019, but it was ranked ninth in the equity capital markets table and did not feature in the top 20 debt capital market rankings, according to Refinitiv data.  Bank of America got stung by lower interest rates in the fourth quarter, sending its profit down 4%, a trend that management expects to continue this year.

The Charlotte, North Carolina-based lender is especially vulnerable to rate movements because of the composition of its balance sheet. As the Federal Reserve cut rates three times last year, analysts predicted Bank of America’s earnings would suffer.

The bank blunted the impact last quarter by growing loans at a rapid clip, and managed to beat Wall Street’s quarterly forecasts. But Bank of America shares fell 2% after Chief Financial Officer Paul Donofrio said net interest income will decline through the first six months of 2020.

Donofrio expects to improve that metric later in the year by growing loans and reducing interest rates on deposits, but predicted Bank of America’s net interest income will be “modestly” lower for the full year.

Analysts gave Bank of America credit for the way it has handled lower rates, with Wolfe Research’s Steven Chubak calling its performance “impressive” and Oppenheimer’s Chris Kotowski saying interest income “held up very well.”

Reuters