Ken Lewis

Who really is the banker of the year?

Jim Kim — Tue, 28 Oct 2008 08:45:39 -0400

The American Banker has announced its banker of the year: Bank of America CEO Ken Lewis. Now some of you might argue that this would have been a good year to simply not give an award. Others might quibble that a better choice might have been JPMorgan Chase's Jamie Dimon. TheDeal.com takes a look at the merits of each and examines why each would have been a decent choice. Both were able to improve their banks' standing during the crisis. In the end, though, adding Merrill Lynch and Countrywide trumped adding Bear Stearns and Washington Mutual. But the award may well prove premature no matter who won. There's not a guarantee that either bank will make their deals work. The most deserving winner might end up being Dick Kovacevich of Wells Fargo.

For more:
- here's the item from TheDeal.com

Big war on for Thundering Herd

Jim Kim — Sun, 26 Oct 2008 19:22:40 -0400

We've noted as of late that the cachet of being a wirehouse broker has really faded. The credit crunch, and resulting turmoil in the industry, has prompted many wirehouse guys to ponder their futures. At Merrill Lynch, most people assume it's open season. Brokers are no doubt fielding calls from headhunters, friends and the likes of Morgan Stanley. But Bank of America is not going to let the Merrill Lynch brand name crumble without a fight. Bloomberg reports that CEO Ken Lewis has authorized big bonuses to retain the top talent. For the biggest producers, the bonus could equal the annual revenue they bring in over seven years. We'll see how that alters the dynamic. The urge to leave may be even stronger.

For more:
- here's the Bloomberg article

Jury still out on Bank of America

Jim Kim — Mon, 06 Oct 2008 21:44:26 -0400

Bank of America fell well below analysts expectations when it announced earnings of 15 cents a share for the third quarter. The average analyst was predicting an estimate of 62 cents a share. The bank also cut its quarterly dividend in half to 32 cents, and announced an offering of common shares to raise $10 billion. None of this is really all that surprising. It certainly points to the challenges the bank faces as it tries to digest both Countrywide and Merrill Lynch. It's fair to say that CEO Ken Lewis has put it all on the line. The outcome of these deals will be his legacy. The integration must occur in a punishing environment. It's not clear at all that he'll get any help from the economy.

For more:
- here's a Fortune update

Thain to stay at Bank of America

Jim Kim — Thu, 02 Oct 2008 12:56:06 -0400

The CEO merry-go-round has been in overdrive in the financial securities industry. John Thain, who was brought on as CEO of Merrill Lynch to a lot of fanfare, looked like he would be another short-termer after he was essentially forced by events into a deal with Bank of America. Some speculated he would leave after the deal was struck. But the Financial Times reports that he will stay on as president of global banking, securities and wealth management. Immediately, you have to wonder if Thain is the guy who the Bank of America board is eyeing as the replace for current CEO Ken Lewis, 62. It looks like he will be given every opportunity to prove that he's their man. As of now, however, he is one of ten executives who report to Lewis.

For more:
- here's the article

Ken Lewis faces his future

Jim Kim — Tue, 30 Sep 2008 12:38:59 -0400

One of the most powerful men in finance resides and works in Charlotte, not Manhattan or London. Bank of America has been on quite a ride. From the doom and gloom of earlier this year, to the much-debated Countrywide acquisition, to the recent deal to buy Merrill Lynch. All of a sudden we're talking about a big three in terms of heft: Bank of America, Citigroup and JPMorgan Chase. For Bank of America CEO Ken Lewis, this is the crowning achievement of a career built on acquisitions. This, in many ways, is the bank he has always dreamed of, even as he tells Fortune that the golden age of financial services is over. His bank is no doubt poised to be a dominator. That assumes he can make it all work, which will be no small feat. Integrating the pieces will in itself be a challenge. Strategically, he must succeed where so many CEOs at Citigroup failed. Will the universalist model finally win? We'll find out.

For more:
- here's the Fortune article on Lewis

Man in the middle: Ken Lewis

Jim Kim — Mon, 15 Sep 2008 21:11:25 -0400

The CEO of Bank of America is not shy about laying big bets, despite the conservative image he wants for his bank. People have been saying for a while now that the Countrywide deal would be his legacy. Now it appears that the Merrill Lynch deal will be. Lewis is buying on the dips, not unlike so many discredited value investors. The result is that he's suddenly running a financial service behemoth. Did he overpay? He says no. The bank is paying about 1.8 times book value. Indeed, the crisis created a golden opportunity to get the Thundering Herd cheap. Merrill, of course, is in no position to bargain. Lewis also wanted to cement a deal and not have to worry about another bidder. But Bank of America is hardly in the clear. Still, Merrill's big deal with Lone Star may pave the way for a successful integration, which Bank of America has done so well in the past.

For more:
- here's a Fortune article
- here's a New York Times article

Bank of America and Merrill Lynch agree to deal, valuation at issue

Jim Kim — Sun, 14 Sep 2008 21:48:52 -0400

What should be made of Ken Lewis, CEO of Bank of America? Most people assumed he wanted no piece of Lehman Brothers, given the bank's integration challenges with Countrywide and his famous quip that he had all the fun he could stand in investment banking. But he loomed as Lehman Brothers' savior until the very end, when he decided he couldn't go forward. Which set the stage for a fateful switch: he set his sights on Merrill Lynch, which stood to be lashed in the fallout of the Lehman news. One might argue that Lewis shrewdly played the endgame, coming out with a deal to buy a much stronger property. One that offers even more synergies. Lewis has long coveted the Thundering Herd, but then there's the issue of price. At $29 a share, there has already been some grumbling. After all Merrill had been trading around $17. This strikes many as another bet-the-farm deal, right on the heels of Countrywide. John Thain, the CEO of Merrill Lynch, after a stormy, short tenure is not expected to be remain as an executive.

For more:
- here's an AP article
- No regulatory issues seen. Article

What to make of the bidding for Lehman Brothers?

Jim Kim — Fri, 12 Sep 2008 11:07:19 -0400

Few would have guessed this: Bank of America, JC Flowers & Co. and China Investment Company (the Chinese sovereign wealth fund) are considering a possible joint bid for Lehman Brothers, reports the Financial Times. Bank of America seemed intent on exiting investment banking as its earnings suffered, but CEO Ken Lewis has apparently changed his mind. You've got to wonder if the bank can handle yet another integration effort. The real news may be that the feds are not going to be super-involved in such a deal. There will be no government money involved. But some rules regarding private equity and financial firms may be relaxed a bit. It seems like an odd arrangement. Would Bank of America integrate the firm under its own brand and share the upside with JC Flowers, who manages $3.2 billion of CIC money? Would they allow Lehman to exist under it own brand? Lots of questions.

For more:
- here's the article

Is Wall Street credibility an issue?

Jim Kim — Mon, 21 Jul 2008 13:28:33 -0400

Breakingviews notes that a lot of CEOs should "now help themselves to generous portions of the sanguine words they have uttered over the last few months." Lehman Brothers' Dick Fuld, JPMorgan Chase's Jamie Dimon, Goldman Sachs' Lloyd Blankfein and Morgan Stanley's John Mack all publicly suggested that the worst was over. But that hasn't turned out to be the case. Perhaps the optimistic words were justified at the moment, but as of now, such pronouncements have been proved premature. Here's another example. In late 2007, Bank of America CEO Ken Lewis uttered a memorable phrase: "I've had all the fun I can stand in investment banking." He wanted to scale back dramatically. As of late, however, the bank has been staffing up, as investment banking revenues have soared to near-record levels. Circumstances can change, people understand that. They've also learned to appropriately discount CEO pronouncements. Trust, but verify.

For more:
- here's the Breakingviews article

Related Article:
Can Wall Street firms be believed?

Bank of America: Another upside surprise

Jim Kim — Mon, 21 Jul 2008 08:18:50 -0400

Bank of America joined Wells Fargo, Citigroup and a handful of other bank that reported better than expected earnings for the second quarter. It posted a gain of 72 cents per share against expectations of about 50 cents per share. Of key interest, the bank announced the Countrywide deal will start adding to the bottom line this year and that cost savings will be higher than anticipated. Credit quality, however, continued to weaken. The bank took $3.62 billion in charges, and boosted its reserves against bad credits of $2.21 billion. Most of this was real estate related. Interestingly, investment banking income was the second highest ever. Remember when CEO Ken Lewis quipped he had all the fun he could handle in investment banking and all but vowed to exit the business? Good thing he didn't.

For more:
- here's the press release