Is Ken Lewis right to have cold feet? Or should he stick with investment banking a little bit longer?
Many millions of dollars and several thousand staff later, it seems Ken Lewis is having serious second thoughts about his intention to become a hip-shaking, hard-hitting, big-swinging investment banker.
After disclosing a 32% decline in 3Q profits, largely courtesy of trading losses and markdowns on leveraged loans, Lewis disclosed that investment banking just wasn't fun any more.
"I've had all of the fun I can stand in investment banking at the moment," he told analysts, before going on to announce that, "The probability of changes and eliminations of some businesses and infrastructure ... is very high."
Now, we can't help but think this is a bit of a shame. Lewis has, after all, sunk some $600m to $700m into building its investment banking platform (according to Lori Appelbaum at Goldman Sachs) and we have the pleasure of being acquainted with several nice people in the London office.
Commercial logic may dictate that Lewis's chilly extremities are leading him in the right direction, however. The European head of one international headhunting firm says Bank of America was never committed to its investment banking intentions: "It was a tenuous effort and a defensive move on their part - they embraced investment banking on a defensive basis and got second-tier people. There was no real reason to go and work there unless you were in a capital-intensive business like leveraged finance."
Do you agree? Is Lewis right to look for fun outside investment banking or should he be courting the likes of Barclays to rejuvenate his i-banking enthusiasm? And, following last week's revelations, should B of A's investment bankers wait around to find out?