BofA to select emergency CEO this week: report

Published 12:00 am Tuesday, December 1, 2009

CHARLOTTE, N.C. (AP) — Bank of America Corp. plans to select an emergency CEO this week in case Ken Lewis steps down before the end of the year, The Wall Street Journal reported Monday.

Last week, the bank said Lewis plans to retire Dec. 31. Bank of America’s board has created a six-member committee of directors to find Lewis’ successor.

But the planning for an emergency replacement for Lewis, who faces possible legal problems over the bank’s acquisition of Merrill Lynch & Co., started before the bank announced Lewis’ retirement, the Journal reported, citing a person familiar with the matter.

The board’s contingency plan picked up momentum last month after a federal judge rejected a proposed settlement between the Securities and Exchange Commission and the bank, coupled with reports that New York Attorney General Andrew Cuomo may file civil securities fraud charges against Lewis, according to the Journal story.

Bank of America spokesman Robert Stickler declined to comment on the report, but said, “the nominating committee is starting its work in earnest, has a number of meetings scheduled this week and we are going forward with finding the process of finding a new CEO.”

Last week, it was reported that Bank of America could be considering naming an interim CEO who would stay for about two years, according to a Journal report Thursday that cited anonymous sources.

Stickler at that time responded to that report saying, “nothing is off the table” in terms of potential hiring options, leaving open the possibility the bank could hire someone on a short-term basis.

The idea of finding an emergency CEO to replace Lewis has some analysts questioning whether there would be additional developments with Cuomo’s investigation.

“It makes you wonder if something is about to happen,” said Aite Group bank analyst Alois Pirker, who asked, “how would the market take it?” if Lewis does step down sooner.

In the event the CEO does leave before a clear succession plan is announced, a possible candidate to replace him is Brian Moynihan, Pirker said. Moynihan became the head of the company’s largest division, consumer and small business banking, in August during a shake-up of the bank’s personnel.

At that time, former Citigroup Inc. CFO Sallie Krawcheck was hired to run BofA’s investment operations. She would also be able to step up if needed, Pirker said.

There is no consensus among analysts and investors about who might succeed Lewis.

Bank of America’s stock, like those of other financial institutions, has been pummeled since the Charlotte, N.C.-based bank announced its deal to acquire Merrill Lynch in September 2008. Since then, the bank’s shares are down more than 58 percent.

Lewis is stepping down from Bank of America after almost a year of strife that followed its purchase of Merrill Lynch. Bank of America has been accused of failing to properly tell shareholders about losses at Merrill and bonuses paid to investment bank employees before the deal closed Jan. 1.

The bank is under scrutiny because it has received $45 billion in TARP money, including $20 billion to help offset Merrill’s losses.

Shares of Bank of America rose 38 cents, or 2.3 percent, to $16.72 in late midday trading.

There has been increasing turnover of senior level management at financial firms over the past year.

On Monday, Alfred F. Kelly Jr., president of American Express Co., said he would step down early next year to look for a role as a CEO. Last week, Bill Winters left his role as co-CEO of JPMorgan Chase & Co.’s investment bank as wel