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November 2, 2007

Bank of America Executive In For The Long Haul

by Stewart Douglas

Story link: Bank of America Executive In For The Long Haul

The chief executive of under-fire Bank of America today announced that he was still supportive of the group’s investment strategy, despite terrible results over the third quarter that cast substantial doubt over the firm’s investment decisions.

Executive Ken Lewis today said that he was one hundred percent committed to improving the situation and Bank of America, and that he has every faith in the investment banking division of the business and its current investment strategy just four weeks after he intimated he may resign.

The news comes off the back of a third quarter that saw the bank forced to accept a fall in revenue by nearly one third predominantly as a result of poor performance by its investment division.

In the wake of the announcement the investment division announced that 3,000 employees were to lose their jobs, and that the divisional head Gene Taylor was preparing to stand down, as part of what was seen as an attempt to cut back on costs in order to aid profitability over the short term.

Mr Lewis’s statements reflected the groups drive towards returning on capital employed by shareholders and investors through its investment banking division as an entity, and that it would make all possible efforts to rebuild its investment portfolio.

The Bank was one of many institutions that suffered heavily as a result of their exposure to the now worthless sub-prime securities market, which proved high yield as a consequence of its high risk at the time.

It remains to be seen whether the Bank of America can turn around their investment business with a view to realising profit on the year end, and indeed whether it can build on its stark falls in revenue this quarter.

 

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