B of A, which paid more for Merrill than the bank's current entire market capitalization, is now more attracted to wealth management, Merrill's other large business, which is less capital intensive than investment banking because it does not involve lending to finance deals and companies. Lewis' new found interest in investment banking surprised some who remembered his famous statement in October 2007 that he had had "all the fun I can stand in investment banking." And as Bank of America looks to recover after reporting its first quarterly loss in 17 years and taking a total of $45 billion in government funds since October, the investment bank may be an easy target for cost-cutting. The company said in December it plans to cut up to 35,000 jobs -- or as much as 11.4 percent of its employees, including former Merrill staff -- over three years. The investment bank is expected to see many of the cuts as business there is slowing, analysts said. "They're making some fairly extensive cuts and in addition you would expect other businesses would bounce back quite a bit," said Peters. Over the long term, she expects investment banking to contribute just 10 percent to 15 percent of the bank's revenues. That is less than half the 32 percent Bank of America had estimated in a September presentation to investors, which was based on figures from the first half of 2008.
$4.3 (02/21/09)
