Northern, WI 04/18/2013 (indicesmedia) – Brian T. Moynihan, the Chief Executive Officer of Bank of America Corp (NYSE:BAC) (closed: $11.70, Down by: 4.72%) said that in comparison to other firms, there are chances of under performance of its trading operations. He said that this is attributed to the fact that BoA takes fewer risks. With the exclusion of accounting charges, the first-quarter income at the firm’s global markets division dropped to $1.39 billion after falling 20 percent. Thomas k. Montag, the Chief Operating Officer oversees this unit. In comparison to analyst estimates of $5 billion, the sales and trading revenue dropped by 13 percent to $4.5 billion.
A balancing act
In a conference call, the 53-year-old Moynihan said that the firm is maintaining equilibrium between its VAR (value-at-risk) and risk-taking with that of the rest of the company. VAR is an industry measure of evaluating potential trading losses. He said that BoA may not make as much noise as some others would as this is one of the several businesses they operate and it is driven specifically for the benefit of its investing and issuing customers. The revenues from consumers divisions for many lenders have been stifled by the newly introduced curbs on fees as well as slowdown in the economy. This had resulted in lenders relying heavily on investment and trading banking for their revenues.
Regulators have been keeping a keen eye on trader risk-taking ever since the “London Whale” episode last year that resulted in a $6.2 billion loss on derivatives for JPMorgan Chase & Co (NYSE:JPM) (Closed: $46.79, Down by 3.51%). During the financial crisis, the Bank of America had taken over Merrill Lynch and Co and the past few quarters at BoA were supported by the operations that it had gained from this acquisition.