30 Comments
 

Bank of America:

a few questions:

Is the investment bank split up into industry groups only? (i.e. sponsors, FIG, Healthcare) or does it also maintain a broad M&A group?

Also, any additional information would be greatly appreciated, particularly as it pertains to their New York office.

kind regards,

will

 
Best Response
sof_2BofA is one of the fastest growing IB on the street. Good M&A and awesome Healthcare Group.

Let's change the tense in that - BofA was one of the fastest growing banks on the street (and should be commended on how they came very close to breaking into bulge bracket status within the amount of time). But it's pretty well documented that they feel burned by their banking division (buoyed largely by their ability to provide leveraged loans), and are looking to scale back on their IBD pretty significantly going forward.

 

I would second Game Theory's comment. It looked like they recently changed their focus after large trading losses. BoA "has had enough fun with investment banking" and is focusing on what they do best, retail banking. The countrywide acqusition, was an opportunity for BoA to purchase more mortgages at a discount and an opportunity to quietly exit the investment banking business.

 

Read the comments from the CEOs press conference a few weeks ago...doesn't sound like their investment bank will be around much longer.

BofA did gain ground by taking a lot of the "low hanging" fruit that none of the other banks wanted. They did especially well on the debt side, which we all know is now in the shitter. Their strength was always retail banking...that's probably what they'll refocus on.

 

I personally know several MDs and VPs at BofA Securities. Trust me, BofA's investment banking is going NOWHERE. They have, however, started to shift their focus from lev. fin. to other IB practices.

 

I don't think MD's or VP's would be straightforward with you if you asked them where they thought the IBD was going. I have several friends and friends of analyst classmates at BofA. Several of them were denied third year offers, and several third years were denied associate offers (they were ranked top tier the year prior). Also, several were given "amicable" options to leave the bank to pursue other interests, and several were laid off from their groups. BofA is seriously cutting back their analyst classes. First sign of them scaling back the IBD.

We had two managing directors from BofA pitching to us (one industry, one FSG) a couple weeks ago. We asked them straight up how the IBD was holding up. They smiled and reassured us that everything was fine...what else could they say? My former group in banking had several laterals over the past 18 months from BofA, they have a pulse on people in the market right now. They tell me alot of people in their particular group are in the market right now..

 

Why do you think BoA was able to grow their IBD so quickly? There business grew because of their strong balance sheet that allowed them to finance a ton of deals. Their IB divisions gained market share because they could take pennies for the advisory work, while charging for the financing.

Some other banks used the same pratice (including J.P. Morgan), but now that the appetite to fund risky deals has disapeared their IBD will become a shell of their former selves. Even top management has made it clear they are retreating from investment banking. As for pratices other than lev fin, only time will tell whether they can compete without their competitive advantage of a strong balance sheet and a low cost of funds.

 

In just the past few weeks I've heard of Analysts being laid off there. Friends at PEs/HFs have heard similar stories recently, in fact just this past weekend I heard of someone else who was laid off.

Personally I'd stay away from BoA at this point... sure if that's your only offer, take it, but if you have a choice I would go to a bank where IBD hasn't been hit as badly and isn't being scaled back.

Perfect example of a bank growing all its divisions mostly because of the frothy PE market and the loan business... until that comes back, don't count on BoA improving too much.

Yes, some groups within BoA may be less affected but I still would not make it my top choice if I were currently looking for jobs/internships.

 

Yes, but that can be said about almost any investment bank on the street. All the IB are cutting jobs, trimming payrolls, and decreasing the size of their respective summer analyst classes. The slowdown in mergers and the large write-downs have been experienced by all the banks and will naturally force them to reassess their investment banking practices. I do not think that BofA is any worse off than the other large banks and I definitely do not think that they will be “closing” their IB practice anytime soon. Once the markets turn around, I bet BofA will be one of the fastest gowing investment banks once again.

 

A (late) reply to the original post:

BofA has all the usual industry groups and separate product groups (including an m&a group). It also has a TDG (sponsors) group as mentioned earlier, but this is not their m&a team, even though they do work closely together. Hope that helps.

Fandango

"It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879)

"Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel
 

Confirming the buzz - without getting too specific, I'm hearing several stories about B of A in the dumps, agree with dosk, stay away if you can.

sof_2 you may be right about other firms, but I'm just not hearing these stories about other banks. Most are trimming new hires, but not cutting their IBD, with the possible exception of LevFin and sponsors. Even at Bear Stearns, my contacts say ibd is solid (for now).

Had an email exchange with a former senior person at B of A, he referred to fall of 2007 as "the contraction" - I guess that's what they're calling it.

 

Weren't most of the losses in BofA's S&T? Does that mean they're going to be cutting down in S&T as well?

"It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879)

"Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel
 

Their m&a activity also plummeted IIRC in the last quarter and their CEO basically told the press that BofA's board had had enough of the wild swings in gains/losses from the IB division. I don't think they'll dissolve it completely, but look for them to be in the Wachovia/HSBC/Barclays group rather than the Citi/JPM- ie, known much more for retail.

 

I agree with Sof- BoA is staying in the game. I am in Europe and lay-offs in their London Operations had little consequences on junior staff. Also, they have a new analyst class on the way...why would they be hiring new analysts if they are thinking about cutting their IBD. They could have retracted the offers, that would have been a cheaper option.

As to what the CEO said in the earnings conf call ("I've had all the fun I could handle with IB") that was a reaction that he later said he regretted. BoA has also plans to expand its ibd operations in Asia.

 

JohnyD, do you mean London IBD operations, or London Operations (as in back office support groups)? Sorry to be pedantic, just wondering which one you mean, especially with regard to expanding in Asia.

"It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879)

"Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel
 

Models, the big difference is that Bear collapsed...and that is not something that risks happening to BoA! Sometimes being the second largest US bank by assets has its advantages.

Fandango, I meant FO IBD positions, that is what I heard from my contacts at their Canary Wharf office in London. As to Asia I may be getting ahead of myself here. I just understood (in a conversation I had with an HR) that they were going to set up a summer analyst class for the first time this year in their Shanghai office (though they are recruiting mostly from local universities, mandarin is an essential)

 

Guys, not sure if you think you are the shit and are too good for any quality opportunity but in times like these that is not a smart assumption for even the best candidates. BofA had a rough PR streak this year, but the fact is it appears they just aired their dirty laundry while everyone else hid their problems to have them imploded on them a few months down the road. Judging by the Q1 results, BofA is well positioned in this rough market. These are legit rankins from the New York Times "Back of the Envelope" rankings from last friday. BofA was #6 GLOBALLY in Investment Banking fees YTD. According to the WSJ "Quarterly Markets Review" from 4/1, BAS was #3 in investment banking fees according to Thomson. #1 in U.S. Equity and Equity linked. #2 in High Yield. #1/2 in Leveraged Finance. #7 in M&A, up from last years 10th. I really have no vested interested in this and these are just facts. They are the only bank that seems to be lending; and actually actively pitch mezz participation and holding loans to us since the sindication market is basically gone right now.

 

“I’ve had all the fun I can stand in investment banking right now,” Ken Lewis said in response to questions about whether the bank might undertake some kind of strategic acquisition to rescue it's flailing investment banking business."

http://dealbook.blogs.nytimes.com/2007/10/18/will-BofA-retreat-from-investment-banking/

That being said, any investment banking job is a good investment banking job in this market, in my opinion. Obviously if you have the option of going to a more stable ibank - MS, JPM, GS etc, that's great, but if not, I wouldn't just turn down BofA IBD, as many posters on here have said, their M&A and Healthcare groups have/had solid reps.

 

I'm kind of new to this board and I just came across this topic.

I'm going to have to agree to with PublicEquity here. He's absolutely right about the bad PR this year. Ken Lewis, who srr636 cited, is known by the banking community, being a former investment banker, as being a loose cannon and saying whatever is on his mind, hurting his own reputation more than anyone else's. BofA is doing some huge deals, and because of their balance sheet, they are able to actually get deals done. They were also the first ones to come out to the public and reveal some of their problems with the current market while other banks waited (later to show the same or worse misfortunes). Although they aren't in the same league as Goldman in terms of prestige, they are a very solid bank and are performing very well, in comparison to other banks, this year.

 

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-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

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