BofA's Krawcheck in Crosshairs ... Again
Sallie Krawcheck is no stranger to corporate in-fighting.
Krawcheck left Citigroup in 2008 after clashing with chief executive Vikram Pandit. Now, at Bank of America's wealth management arm, which includes Merrill Lynch’s brokerage and US Trust, she's seeing long knives again.
A few top executives at the bank are privately trashing Krawcheck and angling to oust her, sources tell CNBC.
With Krawcheck at the helm, however, the wealth management unit has stopped the stampede of brokers moving to rival firms. In fact, a recent poll by the trade publication Registered Rep showed that 75% of the bank’s brokers say they are likely to still be working there in two years, which compares favorably with Morgan Stanley Smith Barney, where only 61% of brokers believe they’ll stick around for 2 years.
For its part, Bank of America says it stands behind Krawcheck.
"The wealth management business at Bank of America has had strong performance under Sallie, who is a popular leader at the bank," a spokesperson told CNBC. "Sallie has the full support of [BofA CEO] Brian [Moynihan]."
Krawcheck has been resisting efforts by some executives at Bank of America to reform the way Merrill Lynch financial advisers are paid, according to sources.
Currently, Merrill brokers are paid on a commission basis, a system popular with the brokers there. Some executives at Bank of America have been pressing for the pay to be changed to a base salary with a discretionary bonus chosen by management. Krawcheck is said to worry that such a change would restart the stampede of brokers headed for rivals.
A spokesperson for Bank of America denies that the firm has considered changing the way brokers are paid.
Krawcheck left Citigroup in 2008. That was after clashing with chief executive Pandit over the fallout from auction-rate securities sold to customers. Krawcheck argued that the bank should pay customers back after the market for auction-rate securities froze. Pandit responded by shrinking her job responsibilities and pushing her down to a lower rung on the corporate ladder, leading Krawcheck to quit.
Krawcheck was an outsider when she was tapped by Ken Lewis to run the wealth management arm, lacking ties to either former CEO Ken Lewis’s North Carolina network or current CEO Moynihan’s Boston-based Fleet folks. Bank of America acquired FleetBoston Financial in 2004.
According to a person close to the matter, Krawcheck’s appointment to the Bank of America post came at the urging of FDIC chief Sheila Bair and Anne Finucane, the Bank of America chief marketing officer who also takes the lead in dealing with Washington, DC. (Finucane is married to journalist Mike Barnicle, who worked for the Boston Globe for years and is now under contract for MSNBC.)
With Bank of America under new leadership and out from under TARP, some executives are maneuvering against Krawcheck.
“They’re saying she was put there by the government,” a person familiar with the matter said. The idea is that now that Bank of America has repaid TARP, it can afford to remove Krawcheck.
Keith Banks, a longtime associate of Moynihan from back in their Fleet days, was passed over for the role that Krawcheck won. Instead, he got the job of running US Trust and Columbia Management. At first it was widely expected that Banks would leave. Those expectations only grew after Bank of America agreed to sell Columbia last year, further diminishing Banks’ position.
Now he may be the leading candidate to replace Krawcheck if the executives trashing her succeed in ousting her, according to people familiar with the matter. An elevation of Banks would bolster Moynihan’s control of Bank of America, putting another long time ally in a key position.
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