B of A Revamps Consumer Banking Operations

Bank of America on Tuesday announced a reorganization of its far-flung consumer banking operations in an effort to bring greater accountability to the firm’s managers and to make the bank more responsive to its 8 million customers.

In what company officials described as the broadest corporate reshuffling in the bank’s history, Bank of America created a new organization called Global Consumer Market, bringing together all of the bank’s retail operations under a central management structure.

Companies officials stressed that the reorganization had been in the planning stages for more than two years and had “no connection at all” to the bank’s recent revelation of huge losses from faulty mortgage pools.

The new organization, however, is designed to provide stricter central supervision of bank functions in branches in the United States and abroad, according to Vice Chairman James B. Wiesler, chief of the new consumer division.

“In every structure you want to have good controls and good accountability, and this structure has it in spades,” he said.

Wiesler added that parts of the plan have been put in place over the past three years in an effort to eliminate “duplication, fat and excess people. We tried first to eliminate turf issues where everyone had his own domain and wasn’t cooperating with each other.”

The program included closing 132 Bank of America branches in California last year, leaving about 950 branches. Officials said another 10% of the branches may be closed or expanded this year.

The bank also reduced its California employment from 40,000 to 32,000 last year, with a further reduction of 3,000 to 4,000 people planned for this year.

“This is the final phase of the evolution,” Wiesler said. “It will make us more efficient and add more dollars to our bottom line.”

The new consumer banking division represents $48 billion of the $120 billion in assets of the bank’s parent firm, BankAmerica Corp., bank officials said. Included under the Global Consumer Markets umbrella will be all of the bank’s retail branches, personal banking services, small and mid-size business lending, trust accounts, real estate, insurance, discount brokerage and marketing.

Samuel H. Armacost, president and chief executive of BankAmerica, called the new organization “a major step in our steady realignment into the premier provider of financial services. We are a customer-driven organization, and as the needs and demands of our customers change in this highly volatile financial environment, we want to make sure we have the flexibility and initiative and the creative aggressiveness to respond to those needs.”

As part of the reorganization, the bank named two new executive vice presidents. Donald Mullane, who was senior vice president for the central and eastern Los Angeles region, will head California sales and service, the unit responsible for services to individuals and small businesses, and nationwide sales and service, whose main component is the bank’s consumer finance subsidiary.

Allen W. Sanborn, formerly senior vice president for banking asset management, will head middle market financial services, comprised of three units that serve middle market customers, and GCM Credit Risk Management, which establishes credit policy for all GCM units.

At Tuesday’s press conference at Bank of America headquarters in San Francisco, company officials declared questions about the mortgage losses off limits. But Wiesler said the results of a large-scale internal investigation into the matter will be released “relatively soon.”

A preliminary report of the 100-person team’s findings was given to Armacost a week ago, but no decisions on employee discipline have been announced. Several low-ranking officers from the bank’s Inglewood branch have been suspended with pay as the result of questions about their handling of trust and escrow arrangements for millions of dollars worth of mortgages packaged by an outside firm.

Bank of America has paid investors, mostly Eastern thrifts, $133 million to buy back their shares in the mortgage pool. Bank officials say the securities are worth no more than $38 million.