Bank of America Pulls Back On Investment Operaton

by Stewart Douglas

Story link: Bank of America Pulls Back On Investment Operaton

The Bank of America has today announced it is planning to cut back on its investment banking operation in the wake of disastrous results over the third quarter, performance it has attributed to the impact of the credit crunch environment and its knock on effect on market trading.

The second biggest US bank after Citi, the Bank of America announced a fall over almost a third in earnings over the third quarter of the year, as a result of its investment banking operation over the period.

As a result, it has conducted a review into the specifics of the poor performance within its investment operation, analysing the investment decisions that were made and where costly mistakes have arisen.

The Bank of America has today suggested that whilst it will put the brakes on investment spending, it will not look to overtake an existing investment bank in order to gain a foothold in the market.

Speaking today on the figures, executives from the Bank of America expressed their frustration at widely swinging performance figures, which have seen its investment arm struggling to find any kind of stability in revenues.

Additionally, the prospect of an investment division detracting resources from other, successful arms of the business was not something that the Bank of America would be prepared to continue to support.

As a result analysts have predicted that the next few months will see the Bank reel in its operation within investment markets, in order to put a halt to the rollecoaster business model it has seen over the last few years.

The Bank of America results were similar to the level of falls reported by Citigroup over the third quarter, again as a result of underperfoming portfolio out of the US credit crunch and market volatility.