December 17, 2008
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News: Is BoA's Hammonds Retirement Due to Health (of the bank?)
Makes a person wonder. Even though 40 years of devotion deserves a little time off, are other factors involved? Bruce Hammonds has long been a giant in the credit card industry. Along with his replacement, BoA's consumer credit risk executive, Ric Struthers, Mr. Hammond was one of the co-founders of the recently acquired credit card giant, MBNA. BoA added that institution to their credit card portfolio for $35 billion, back in2006.
An unnamed spokeswoman from the bank conceded that the entire credit card industry is embarking on tough times but added that BoA is healthy and up to the challenge. BoA claims to have the "largest credit card portfolio in the world." Ken Lewis, the bank's CEO, acknowledged that the entire credit card industry is anticipating record losses this year but, these are not problems that can't be contained.
BoA, headquartered on No. Tryon St. in Charlotte, NC, is still moving forward in the credit card business. They are one of the few truly innovative lending institutions that offered to turn bonus points into real cash instead of forcing clients to buy products they didn't need just to redeem points. They continue to offer the most attractive terms to responsible prospects with good FICO ratings, like zero-percent introductory promotions and $50,000 credit limits. They have a good record of assessing risk based on behavior. But critics question whether those guidelines will still work in the extreme times our nation is facing now. Long after the Bush administration is gone, eighth years worth of momentum will continue to pile up the railroad cars long after the wrecked locomotive has stopped. While the engineer retires in Texas, the passengers will continue on route to financial conditions resembling the Great Depression.
Forging out as the local NCNB (North Carolina National Bank), BoA has gained world prominence in a relatively short time. One of their greatest strengths is in their powerful deposit franchise, which will shore up their credit card losses, in part. However, the devastated economy is ravaging every facet of banking and other serious concessions will be necessary to regain the EPS (earnings-per-share) ratings demanded by Wall Street. As such, BoA will have to let some people go for the meantime – about 32,500 over the next three years. Considering the bank currently has almost a third of a million employees and is still swelling, that only represents about 11% of their fold. Almost double that 32,500 is currently being added as BoA acquires the New York-based - Merrill Lynch in the near future.