Bank of America Corp. (NYSE:BAC) chief executive Ken Lewis said Monday morning that the integrations of Merrill Lynch & Co. and Countrywide Financial are on track. His comments came as the bank released an
encouraging first-quarter earnings report that showed profit of $4.2 billion, up from $1.2 billion during the same period in 2008.
The earnings were certainly welcome news for Lewis, who along with the BofA board, is facing lawsuits and a proxy fight over losses tied to recent deals. (See our
two-part video interview with BofA shareholder Jonathan Finger, who's lobbying to oust Lewis and two other board members.) But integrations take time, particularly one on the scale of Merrill, and it's way too early to deem it a success or a failure.
As we noted last October in our feature
"Making megabanks," retaining talent is key, particularly top wealth managers. Already BofA has seen
top Merrill bankers decamp, and there's plenty of speculation that Merrill's thundering herd is anxious about life under BofA management.
But talent retention is just one piece of what in Merrill's case could be a lengthy integration. Complex financial systems need to be integrated or migrated to new platforms, client lists need to be merged, and brokers need to be cross-trained to sell products- - all while keeping jittery clients from bolting.
And hanging above these nuts and bolts integration initiatives is the question that get asked every time a financial institution pursues a universal bank model: Can conservative, risk-averse bankers and aggressive investment bankers co-exist harmoniously within a single management structure -- and should they?
There's certainly a case to be made that giving Ken Lewis the time to address these issues is the right decision. To his credit, he has successfully integrated dozens of banks throughout a long career. The question is, will shareholders be willing to wait. We should get some indication of that on April 29, when shareholders gather in Charlotte, N.C., for what is likely to be a contentious annual meeting. - Suzanne Stevens
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