Bank of America - A Management Case Study

Welcome to Bank of America!! This is a blog that would focus on BofA with respect to the various management criteria.

Company Profile

Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange

HISTORY

1783 The treaty of Paris formally recognises American independence – ending the British prohibition against American-owned banks.

September 1783 A small group of Boston’s leaders, led by founder Moses Michael Hayes, quickly exercise their newly-won freedom and create the stepping stones of the Massachusetts Bank, Bank of America’s earliest predecessor.

1784 The bank opens for business.

1805 A branch in Maryland opens to serve the needs of farmers. It is believed to be the first to pay intetestr on deposits to customers

1958 The bank introduces BankAmericard, the first general use credit card and the first to be licensed to other banks across the country.

1998 Nationsbank acquires Bank of America – creating the first coast-to coast retail banking franchise. The group retains the Bank of America name.

2004 Bank of America buys FleetBoston Financial, extending the bank’s rach throughout the northeast

2006 Bank of America buys MBNA.

2008 Bank of America agrees a rescue deal to buy Countrywide in a $4bn deal. Losses: Bank of America’s mortgage business – some of which is Countrywide — lost $8.9 billion in 2010 and $3.8 billion in 2009.

2009 BoA buys Merrill Lynch for $50bn

STRATEGIC EVOLUTION

Critically reviewing the overall history of the Bank of America, it becomes evident that the organization accomplished in strategic evolution through intended expansion. When Amadeo Giannini began merger operations in the late 1920s his intent was clearly to expand the organization. Unfortunately, the Bank Holding Company Act of 1956 put an end to many of the developments that have taken place with respect to the Bank of America. After the legislation was passed Giannini was forced to relinquish both his insurance companies and as interstate banking operations. Once changes were made to the legislation in 1976, the Bank of America continued upon its path of expansion choosing to acquire some of the largest banks in the United States. What this effectively suggests is that the strategic evolution of the Bank of America was predicated upon the intended acquisition of other bank operations, with the purpose of increasing the organization's size of wealth.

In addition to the intentional nature of the acquisitions carried out by the Bank of America, the organization has also demonstrated its intentional strategic evolution through its consistent development of new banking services and technology for the banking industry. Throughout the course of the mid-twentieth century, Bank of America found new and innovative ways to expand the products and services that it offered to customers. Because of these initiatives, many of the modern banking techniques that are currently utilized in the industry began with the Bank of America. Credit cards, mortgages, and commercial loans are all representative of the efforts of the Bank of America to provide service to the general public.

MISSION/MAJOR GOALS

Bank of America does not have a centralized mission for the development of the entire organization, Bank of America has been able to focus on community development and the principal means for establishing its organization. Overall, Bank of America believes that the development of neighborhoods and communities is essential for the sustainability of the organization over the long-term. To this end, the organization undertakes a wide range of projects, which involve everything from environmental conservation to providing monies for the development of infrastructure into communities in which it operates. Thus, Bank of America has attempted, in recent years, to remain focused on the issue of community development as a means to grow its business.

VALUES

Bank Of America has a very high and efficient value system

• Doing the right thing : We have the responsibility to do the right thing for our customers, shareholders, communities and one another.
• Trusting & teamwork : We succeed together, taking responsibility for our customers' satisfaction.
• Inclusive meritocracy : We care about one another, value one another's differences, focus on results and strive to help all associates reach their full potential.
• Winning : We have a passion for achieving results and winning - for our customers, our shareholders, our communities and one another.
• Leadership : We will be decisive leaders at every level, communicating our vision and taking action to help build a better future.

THE CEO AT THE TOP

It is imperative for any organization as big as Bank of America to have a great leader in charge of the organization. Brian Moynihan, the current CEO of BofA has had mixed fortunes with BofA. He has faced his fair share of criticism along with appreciation. On one hand, he was ranked the worst big bank CEO based on stock performance in US. On the other hand, he has been lauded for his work from none other than Warren Buffet. Here is an excerpt of what Warren Buffet had to say about BofA CEO Brian Moynihan.

"“Brian has been doing exactly the right things in terms of correcting problems, exactly what I would be doing. He’s done a terrific job. He has gotten rid of one thing after another that was a problem. He’s getting it back to basic banking.”

On the basis of the above comments, BofA seems to be in very able and responsible hands

PRODUCTS AND SERVICES

Bank of America works provides a lot of financial services but they have very efficiently divided their entire operation into six major segments.

1) Deposits- includes products provided to consumers and small businesses. Bank’s deposit products include traditional savings accounts, money market savings accounts, commercial deposits, IRAs, checking accounts, as well as investment accounts and products.
2) Card Services- Card Services is one of the leading issuers of credit and debit cards in the U.S. to consumers and small businesses providing a broad offering of lending products including co-branded and affinity products.
3) Consumer Real Estate Services (CRES)- provides an extensive line of consumer real estate products and services to customers nationwide. CRES products include fixed- and adjustable-rate first lien mortgage loans for home purchase and refinancing needs, home equity lines of credit (HELOC) and home equity loans.
4) Global Commercial Banking- provides a wide range of lending related products and services, and integrated working capital management and treasury solutions Bank’s clients include business banking and middle-market companies, commercial real estate firms and governments. Bank’s lending products and services include commercial loans and commitment facilities, real estate lending, asset-based lending and indirect consumer loans. Capital management and treasury solutions include treasury management, foreign exchange and short-term investing options.
5) Global Banking & Markets (GBAM) provides advisory services, financing, securities clearing, settlement and custody services globally to Bank’s institutional investor clients in support of their investing and trading activities. Bank also works with commercial and corporate clients to provide debt and equity underwriting and distribution capabilities, merger-related and other advisory services, and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income and mortgage-related products.
6) Global Wealth & Investment Management (GWIM)- GWIM consists of three primary businesses: Merrill Lynch Global Wealth Management (MLGWM); U.S. Trust, Bank of America Private Wealth Management (U.S. Trust); and Retirement Services. Through these three businesses, this segment provides brokerage, banking and retirement products in both domestic and international locations to wealthy and ultra wealthy clients (with investable assets of more than $5 million). Retirement Services provides comprehensive investment advisory services to individuals, small to large corporations and pension plans.

GEOGRAPHICAL SPREAD OF THE COMPANY

Bank of America operates in all 50 states of the U.S., the District of Columbia and more than 40 other countries. It has a retail banking footprint that covers approximately 80 percent of the U.S. population and serves approximately 57 million consumer and small business relationships at 5,700 banking centers and 17,750 ATMs.

So Clearly, BofA believes in the policy of increasing business by increasing accessibility

TOP MANAGEMENT

 CEO - Brian Moynihan

CHAIRMAN - Charles Holliday

VICE-CHAIRMAN - Charles Noski

CFO - Bruce Thompson

SWOT ANALYSIS

. CSR ACTIVITIES

Bank of America gives very high priority to CSR Actitvities: Some of these activities are"

}  Donated $207.9 mn towards charitable giving in 2010 – Beneficiaries include Feeding America and YouthBuild.

}  BofA charitable foundation – Annual giving of $200mn, BAC is the second largest cash giver in US.

}  $1.5tn Community development lending goal established in 2009.

}  Over last 10 yrs, BAC and its employees have donated more than 200,000 volunteer hours and $24mn in support of Habitat for Humanity’s mission.

}  Neighbourhood Excellence Initiative(NEI)

}  One of the leading supporters of art and culture

}  Has supported many disaster relief efforts around the world

}  Supports CDFIs - More than $48bn extended to not for profit organizations

ENVIRONMENTAL INITIATIVES

}  2007 – Embarked on a 10-year, $20bn initiative to address climate change. Already spent $11.6bn

}  Has increased investments and financing of advanced energy technologies to promote renewable energy sources.

}  Works with Duke University on energy and environmental issues, including foundation of CSI in 2007

}  Unique Coal Policy

}  2010, BofA Merill Lynch purchased from Nuru Energy several million Kyoto-compliant market carbon credits over 10 yrs.

}  Greenhouse Gas(GHG) Reductions – 7.5% reduction from 2009 to 2010

 CONCLUSION

 We see that Bank of America is built up on strong leadership, strategically sound principles. It is a huge organization with burgeoning acquisitions. They place high priority on CSR and Environmental Initiatives. Providing Value to the customer is of utmost importance in BofA's Culture. So we can say that BofA is a great organization built up on efficient principles of management!.