Page 195 - Bank Case Studies

BofA: Recovery

The recovery in the U.S. has, since 2009, been stronger and

more sustained that was thought possible initially. Against

this background the BofA has made substantial gains as its
programme of stock buyback accelerated.

The election of President Donald Trump, the perception that

the new administration would relax banking regulation and

the potential for rising interest rates impacted on BofA

helping to boost its profits.

“Mr Moynihan is now hacking away at anything not directly

related to servicing Bank of America clients. He has got rid

of stakes in Santander, BlackRock, China Construction Bank

and Banco Itaú; credit-card businesses in Britain, Canada,

Ireland and Spain; and a slew of private-equity investments.

He has kept hubs in London and Hong Kong for trading and

investment banking, which act as a conduit between foreign

clients and America, and American clients and the world.

But wealth management, once offered in 35 countries, is

now offered in just one—America.” (26)

Nevertheless, as recently as February 2016, BofA’s shares
traded at half their accounting value. Regulations that in

effect outlawed acquisitions constrained its opportunities
for growth. Investors had little faith in the worth of its

assets, or indeed in its strategy. (26)

It is only in the last year 2017/8 that its share price has really

re-bounded and in the last year it doubled.