Rarely has a star fallen more heavily from the sky. 18 months ago, Christian Meissner, head of the corporate and investment bank (CIB), at Bank of America Merrill Lynch was being lavished with praise for building a brilliant new CIB full of "energized" people delivering a "unified product offering and integrated client strategy.” Today, that same glowing Meissner is out - replaced by his deputy Matthew Koder, who's being parachuted in from APAC.
While Meissner's messianic reputation had already faded in line with the bank's recent miserable performance in M&A, his sudden exit seems nonetheless to have been a surprise at Bank of America Merrill Lynch. The suspicion is that politics played a role. The suspicion too is that Tom Montag, COO and co-head of the securities business, might have had something to do with it. "Montag saw Meissner as a bit of a threat," suggests one BAML insider. "The recent under-performance provided an excuse."
That under-performance has been notable and extreme. Revenues in Bank of America's M&A division fell 42% year-on-year in the second quarter of 2018. Today's first half league table from Coalition shows BofA ranking between fourth and sixth globally for its investment banking division (IBD). In 2013 (just one year after Meissner joined), Coalition's similar table showed Bank of America ranking equal first. It's not exactly great work.
Except... the shriveling of Bank of America's investment banking franchise seems to have been a deliberate policy. In last year's adulatory piece in Euromoney Meissner explained that BofA had intentionally set about shrinking its number of banking clients from 12,000 to 5,000 and being more choosy about the deals it worked on. The new shrunken Bank of America was all about responsibility, he said: "It goes back to client selection – if you are less concerned about risk, sustainability or chasing any transaction, then you probably have a very different list of clients.”
Maybe BofA got too choosy? Even before M&A revenues plummeted 42% there were complaints that the bank was losing business due to a tortuous approach to risk management which mean potential deals were scrutinized from every conceivable angle and approved only slowly - if at all. The bank, however, said it was "deepening long-term relationships" and hiring-in new senior people. Meissner himself said previously that building an M&A business takes three to five years once the right people are in place, and the bank's whole focus was long term, rather than on short term league table rankings.
For some reason, then, Meissner seems to have run out of time. It may be that BofA CEO Brian Moynihan got bored with waiting: “The team knows they can do a better job and are after it,” said Moynihan after this year's miserable Q2. However, it also seems strange that Montag - who worked with Meissner in the two men's former existence at Goldman Sachs - and who both plucked him from Nomura and repeatedly promoted him at Bank of America, didn't stand by his man. After all, Montag - despite officially being COO - retains control over the banking and markets business and must have known what was going down.
Meissner therefore looks like the fall guy for what may yet prove a short term drop in revenues (BofA argued that Q2 only looked comparatively awful because the year-before quarter of M&A revenues was so strong). Insiders claim his exit both clears the way for surviving senior staff to claim credit for a recovery, and allows BofA to swiftly ditch several million in London costs (ie. Meissner's London salary) ahead of an expensive Brexit. What's not to like?
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