In our last blog about the shake up at Barclays and Deutsche Bank we had asked you to watch this space.
In the latest management overhaul, America’s second-biggest bank by assets, the Bank of America, is seeing off Bruce Thompson, the bank’s chief financial officer.
Tough New Regulatory World: The abrupt departure is seen as stemming from the struggle of banks to meet the challenges of a tough new regulatory world. Mr. Thompson was at the helm when Bank of America for considerable period and had submitted to the stress tests of the Federal Reserve. Stress tests aid regulators in determining how a bank will cope in times of crisis and how much cash they can return to shareholders. Hence, passing a stress test is seen as a boost for big banks as well as a pat on the back by the Fed.
However, Bank of America proceeded to flub up the stress test thrice in the last five years; in March, the bank was given conditional approval from the Fed who felt it needed to pull up it’s socks. In a statement, the Fed had said, “Bank of America has to address certain weaknesses in its capital planning processes.” Mr. Thompson was one of the senior executives who oversaw the firm’s stress-test submissions to the Federal Reserve.
Dream Team & Dream Plan: Bank of America is now putting in place a new team, which will deal with regulators regarding stress tests and similar issues. In September, the bank is planning to spend 100M $ and resubmit it’s stress test plan to the Federal Reserve and this time there will be no margin for error. Similar to the challenges in the industry majority of issues and regulatory compliance are around data.
Wobbly Bank of America Shares: Financial analysts have long questioned the stability and efficiency at the top tiers of the bank. Even though the bank’s shares have ascended slowly in July, they are still far behind the gains of their contemporaries. The pressure is growing on the bank to increase revenues and streamline procedures.
Big Data Technology Innovation to the Rescue: As more and more leading executives of big banks are affected by regulatory controls, the only way to plug the dam is to rely more on technology that will assist them with timely and accurate reporting. Hexanika recommends use of innovative technology such as Big Data to clean up the legacy banking methods to source, aggregate and report. The key is to innovate instead of being in dinosaur mode. Step up to the plate. Hexanika is there to show you how to scale the heights.
Relevant Link in a Box: http://goo.gl/w5NhBI
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Bank of America Financial Chief Exits as Part of Shake-Up – WSJBank of America Corp. shook up its management team Wednesday, months after regulators chastised the firm’s leadership after another flubbed “stress test” submission.Read more… |
Image Credits: Mike Mozart via Flickr
Authors: Maheen Usmani (https://ke.linkedin.com/pub/maheen-usmani/ba/a9a/152) & Yogesh Pandit (https://www.linkedin.com/in/yogpandit)