Brokers at Bank of America’s (BAC) Merrill Lynch unit are being targeted by rival firms where recruiters are using the bank’s recent troubles in their pitches to get brokers to jump ship, several brokers told the FOX Business Network.
The large-scale recruitment effort is the latest blow to the troubled bank, which has seen its share price fall dramatically in recent days over concerns that it has a multi-billion dollar liability involving toxic mortgages sold to investors during the housing bubble.
The mortgage problem has placed the job of CEO Brian Moynihan in jeopardy.
Those mortgages were sold by the bank’s Countrywide Financial unit, but one bright spot in the bank’s current problems has been the performance of its Merrill Lynch brokerage unit, one of the largest brokers on Wall Street with a highly regarded retail sales force. In fact, Moynihan recently said he cannot spin off Merrill because of its importance to Bank of America’s bottom line.
But Merrill Lynch’s performance might change if brokers begin to jump ship given the drumbeat of negative news about the bank. Brokers say they’re getting particularly aggressive offers from executives at the brokerage units of UBS (UBS) and Morgan Stanley (MS).
The problem for Bank of America is that brokerage customers are fearful of doing business with a bank in financial straits; in addition, brokers worry that their own salaries might be tied to the overall bank’s performance.
A Bank of America spokesman had no immediate comment.
It’s unclear if the recruitment effort is having an impact, at least for now, but the calls are now picking up steam as news headlines about the bank’s problems continue to multiply.
“We’re getting calls and the recruiters are not being bashful about using all of our problems as bait,” said one senior broker at Merrill, who spoke on the condition of anonymity.
One problem Bank of America might have in retaining its top brokers is that many were dissatisfied with working for a big bank even before the latest turmoil. Bank of America purchased Merrill Lynch’s investment bank and brokerage business during the dark days of the financial crisis in the fall of 2008. Merrill’s brokerage unit, known as the “thundering herd”, has a long and storied reputation for being Wall Street’s premier and most independent sales force dating back to the firm’s creation by Charlie Merrill nearly 100 years ago.
But working under the umbrella of a large, and some would say bureaucratic, bank like Bank of America has led to tensions inside the brokerage unit. Many brokers have bristled over some of the policies forced upon them by BofA, such as pushing certain bank products to their customers, and the layers of management that weigh in on their business practices.
“Many brokers who have stayed through the Bank of America transition may now be thinking twice,” another veteran broker said. “I know I am.”