Bankam To Shut Down M & A, Equity Units
Bank of America (BankAm) will close down a part of its investment banking division -- mergers and acquisitions (M&A) and equity advisory services -- in Asia, Latin America and eastern Europe.
The decision has been taken following a review of business operations and as the proposed activities of the bank represents only two per cent of the bank's revenue. BankAm had earlier sold off its retail operations in India, Singapore and Taiwan to ABN Amro Bank.
Of the 3,000 staff which BankAm has in 12 countries in Asia, around 55 will be affected. The move will also affect around 10-12 staff in the Indian operations.
According to Colm McCarthy, president, Bank of America, Asia (Singapore): "The bank will concentrate on three broad areas -- raising of debt capital, global markets and working capital management. It is not a major pullout, we are only tweaking our business and concentrate on the three generic areas as the contribution from M&As and equity was only two per cent of the revenues."
Though Indian operations was an outperformer among the other Asian markets and the two operations generated over 10 per cent of the revenues in India, the Indian operations will also be phased out.
Other than India, in Asia the bank had not been able to build up any significant research and equity capability.
According to BankAm managing director Vishwavir Ahuja, no new mandates will be taken. However, the work on the existing mandates will be completed.
BankAm will now concentrate on structured finance deals, debt restructuring, capital control advisory, equity derivatives, quasi equity etc.
Ahuja said the exiting of retail business is different from the present decision. The bank was into retail business only in India, Singapore and Taiwan outside America, and the sell-off proceeds were invested back in India.
Bank America Securities, the security subsidiary of the bank, will be getting into primary dealership and fixed income dealership. The bank has invested $50 million for the same.
The bank is also opening its fifth branch in Bangalore which would be targeted at the multinational companies and technology companies, said Ahuja.
Other than initial public offerings, the bank will be trageting the middle-layered technology companies for cash management services and payments both domestic and overseas.