Bank of America gets bounce from exec shakeup

AP News
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Posted: Sep 07, 2011 12:35 PM
Bank of America gets bounce from exec shakeup

Shares of the battered Bank of America jumped 5 percent Wednesday following an executive shakeup that investors hope will pull the company out of its rut.

The bank said late Tuesday that it would now be run under the leadership of two chief operating officers, David Darnell and Tom Montag. The bank also said that Sallie Krawcheck, head of global wealth and investment management, and Joe Price, president of the consumer bank, are leaving.

It is the latest attempt by CEO Brian Moynihan to turn Bank of America around while it deals with an unknown quantity of toxic mortgage loans. The change-up comes just three weeks after Warren Buffett said he would funnel $5 billion into the company.

There has been talk that Bank of America may be forced to reinvent itself as a smaller bank, or even sell itself in pieces.

Sterne, Agee & Leach believes the promotion of Montag and Darnell erases any chance of the latter occurring.

"While the reorganization and executive departures are not necessarily a surprise, the promotion of both Darnell and Montag greatly diminishes any speculation that Moynihan has given any serious consideration to a Merrill spin off or meaningful breakup of the company," analyst Todd Hagerman wrote.

Shares of Bank of America Corp. rose 35 cents to $7.34 in midday trading. That is further from the yearly high of $15.31, than it is to the low of $6.01.

Hagerman remains cautious on the stock due to the global economic slowdown, capital uncertainty and the company's diminishing earnings power.