Bank of America chief executive, Brian Moynihan, said that investment banking fees at the bank will slide by up to 60% in the fourth quarter, capping a tough year for dealmakers, but expects trading revenue to take up the slack.
“Pools are down by 55-60%,” Moynihan said during the Goldman Sachs US financials conference. “Our market share is holding and will be in the same range. The good news is on the trading side, we’re going to be up 10-15%.”
Investment banks have pulled the trigger on job cuts in the final quarter of 2022 after fees slumped by over 50% at most investment banks.
David Solomon, chief executive of Goldman Sachs, told the same conference earlier that he had expected a bounce back in capital markets activity during the fourth quarter “but that hasn’t happened”.
Bank of America made $8.2bn in investment banking fees last year, according to data provider Dealogic, and so far this year has pulled in $4.3bn, sitting behind JPMorgan and Goldman Sachs in the rankings.
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Moynihan said that “pipelines are still pretty strong”, but the question was whether fees would bounce back to record levels seen in 2021, when the industry hauled in a record $130bn, or to 2020 levels. Bank of America made $6.1bn in fees in 2020.
“I think it will come back to six [$6bn],” Moynihan said. “The pipeline is there to open back up as long as we get some stability in the market.”
Bank of America is one of the few large investment banks yet to announce any job cuts within its investment bank. Moynihan said that “we don’t lay people off”, but “we have an ability to reshape our headcount pretty quickly just by turnover”.
The bank has reset hiring priorities, he said. “We went back and said ‘all the job openings are closed, let’s start from scratch,” he said, adding that Bank of America was largely hiring for front-line and essential staff.
“We ran around about 205,000 [people] and we’re back up to 215,000,” he said. “We need to run that back down.”
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