By Christina Rexrode
Bank of America Corp. shook up its management team Wednesday,
months after regulators chastised the firm's leadership after
another flubbed "stress test" submission.
Bruce Thompson, the bank's chief financial officer and once
considered a close ally of CEO Brian Moynihan, is leaving the
Charlotte, N.C., firm, according to an internal memo sent to bank
employees Wednesday evening.
The bank also announced that David Darnell, a vice chairman who
oversaw the wealth-management division, is retiring.
Mr. Thompson's departure is a surprise. The 50-year-old
executive spent the bulk of his career in the firm's investment
bank and was among a handful of executives discussed as a potential
successor to Mr. Moynihan. More recently, Mr. Thompson was one of
the senior executives who oversaw the firm's stress-test
submissions to the Federal Reserve.
Stress tests have become important flash points for big banks
since the financial crisis because the Fed uses them as an
opportunity to review a bank's planning and resilience in a
potential recession. Banks generally must pass the Fed stress tests
to increase dividends or buy back shares.
Bank of America stumbled on the test three times in the past
five years, most recently in March when the bank only received
conditional approval from the Fed. At the shareholder meeting last
year, Mr. Moynihan asked Mr. Thompson to stand up and answer
questions from investors about the stress-test difficulties.
The once-close relationship between Messrs. Moynihan and
Thompson deteriorated in recent months, according to a person
familiar with the matter.
The Wall Street Journal reported last month that the Fed warned
the bank it wasn't doing enough to anticipate problems with its
stress-test submissions. At the time, the bank said Mr. Moynihan
was "keeping the heat on everyone to get this on track."
The Wednesday memo said Mr. Thompson had decided to step down.
In a statement Wednesday, Mr. Moynihan said, "I am confident in
saying that no finance executive in the world in the past decade
has contended with greater challenges and discharged his
responsibilities with as much skill and grit as Bruce
Thompson."
Mr. Thompson is interested in pursuing jobs where he can work
more closely with clients, according to a person close to him.
Wednesday's moves will likely tighten the focus on Mr. Moynihan,
who after more than five years leading the nation's second-biggest
bank by assets is under growing pressure to increase revenues and
move the firm beyond its crisis-era problems. Bank of America last
week posted a revenue gain after five consecutive quarters of
declines.
The bank's shares have climbed steadily this month but still
trail the performance of many peers. Bank of America gained about
32% over the last five years, compared with a 63% gain in the KBW
bank index.
The shake-up will also intensify questions about who might
succeed Mr. Moynihan, who is 55 years old. Some analysts and
investors have complained that the bank hasn't been clear about who
could replace him. Among the leading candidates still at the bank
is Chief Operating Officer Tom Montag, who also runs investment
banking.
In the Wednesday memo, he was the first executive mentioned,
with Mr. Moynihan saying he and the rest of the management team
"benefit each day from [Mr. Montag's] leadership and partnership."
Mr. Montag is 58 years old.
Bank of America on Wednesday also announced a suite of other
moves that will result in a mostly new team dealing with regulators
on issues related to the stress test and related matters.
Paul Donofrio, a former Navy pilot and Bank of America veteran,
will replace Mr. Thompson. The bank had moved him earlier this year
from his longtime post in the corporate bank to the role of being
CFO of the consumer bank and wealth management.
Terry Laughlin will succeed Mr. Darnell. Mr. Laughlin is a
longtime ally of Mr. Moynihan, having worked with him in the early
1990s at Fleet Financial Group. Mr. Moynihan put him in charge of
the bank's stress-test resubmission to the Fed, which is due at the
end of September. He previously tapped Mr. Laughlin for
problem-solving jobs like fixing the bank's mortgage woes.
Andrea Smith, the head of human resources, will be elevated to
the newly created role of chief administrative officer, and will
eventually take over control of the stress-test submissions as well
as the "living wills" that the bank must report to regulators
specifying how they would break themselves up in a worst-case
scenario.
Mr. Darnell's retirement had been expected after he gave up a
bigger job at the bank last year and moved to Florida. A Charlotte
native, Mr. Darnell, 62 years old, joined the bank in 1979 after
being recruited by Hugh McColl Jr., who went on to become CEO of
the firm that became Bank of America. Mr. Darnell's name was
floated as a potential CEO candidate when Ken Lewis stepped down in
2009, the job that Mr. Moynihan ultimately won.
Sheri Bronstein will replace Ms. Smith as head of human
resources.
In the memo Wednesday, Mr. Moynihan noted "how far we have come
in our journey over the past few years.... There have been some
challenging bends in the road on which we have travelled. But we
have progressed through your hard work and the talent of our
leaders."
Write to Christina Rexrode at christina.rexrode@wsj.com
Access Investor Kit for Bank of America Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0605051046