Strategic Plan Demanded as Bank of America Seeks to Close Performance Gap with Key Rivals

Pressure is currently being faced by the executive leadership of the second-largest U.S. lending institution, as intense focus is being placed upon the need to significantly boost financial returns through strategic actions in areas such as dealmaking and wealth management. These actions are considered vital if the bank is to successfully reduce the considerable performance gap that has developed between itself and its larger industry rival. A major gathering of investors is scheduled to be convened in Boston on November 5th by the Chief Executive Officer, who has held the leadership role since 2010. During this event, a detailed strategy is expected to be formally outlined, specifying how the institution plans to achieve meaningful growth after its returns have been consistently observed to trail those of its peer group. The convening of this meeting is particularly noteworthy, as it represents the first comprehensive investor engagement of this nature to be held by the bank since 2011.

It has been suggested by informed investors that the upcoming presentation could be strategically utilized by the bank to underscore its competitive advantages in certain operational segments, particularly those pertaining to its strength in the consumer and small business lending markets. Despite these established strengths, shareholder scrutiny remains intently focused on the divisions where the bank’s performance has been found to be lacking in comparison to market leaders. Specifically, the investment banking division is widely considered to be engaging in a determined effort to close the gap in key dealmaking revenue, where it remains behind the output of major competitors. Similarly, the institution’s wealth management arm is responsible for managing fewer client assets when compared not only to the largest rival but also to a smaller, specialized competitor in that field. Consequently, the methods by which the leadership team intends to strategically close these significant market deficits in the coming years are being rigorously assessed and are expected to form a central pillar of the strategy presentation.

The institution’s performance over the last decade and a half has been subjected to pointed and highly critical analysis by prominent banking analysts. It was asserted that a “remarkable” degree of underperformance by the bank, relative to the wider industry, has been documented over the past fifteen years concerning the critical metric of loan growth. It was further observed that similar patterns of lagging performance have been noted in several other key segments, specifically including certain areas of wealth management, core investment banking activities, and credit card services. These historical deficiencies establish the challenging context against which the new growth strategy must be evaluated by the investment community. No immediate comment regarding these observations was provided by the institution.

The foundation for the current strategic focus was laid following the severe instability generated by the 2008 financial crisis, a period during which the stability of the global economic system was acutely threatened. The current leadership assumed its role shortly thereafter. Following the crisis, a challenging period was endured, during which the purchased investment bank, Merrill Lynch, which had been bought at the point of collapse, was systematically integrated into the broader structure. Crucial early actions involved the successful repayment of government bailout funds and the implementation of significant and extensive job reductions. After what was acknowledged to be a difficult initiation, a momentous organizational turnaround was successfully engineered. This reconstruction effort was consistently guided by an oft-repeated corporate mantra emphasizing “responsible growth.” The successful, multi-year rebuild that followed secured the Chief Executive a global reputation as a steady and reliable operator, leading to regular appearances on prominent international stages alongside world leaders.

Now that the financial stability of the core institution has been restored and fortified, the investment community’s attention has shifted decisively toward future profitability and the next phase of expansion. The critical question being posed by shareholders, including those represented by senior equities analysts, relates to how greater returns can be extracted from the substantial capital investments that have been made in the overall banking infrastructure over the preceding years. It is being questioned how the leadership team will translate the stability achieved through “responsible growth” into superior earnings performance that can finally meet or exceed the metrics consistently delivered by the bank’s most successful domestic rivals. The upcoming investor meeting is therefore recognized as a high-stakes event where a clear, well-defined, and implementable roadmap for achieving higher levels of sustainable profitability is urgently expected to be presented and convincingly defended. The necessity of generating high returns through the lucrative, fee-based business lines of dealmaking and asset management is considered paramount if the performance gap is to be successfully closed.