Nearly eight years after Bank of America (NYSE:BAC) purchased Merrill Lynch, one of the nation's leading bank analysts, Dick Bove, recently wrote that "Bank of America is simply blowing up the Merrill franchise presumably because it does not like the business or it does not know how to manage it."
Bove based his conclusion largely on an analysis of Bank of America's trading division. Since 2010, the unit's revenues, most of which stem from its Merrill Lynch franchise, have fallen from $10.1 billion a year down to only $6.5 billion. That equates to a 36% drop.
Finally, under chairman and CEO Brian Moynihan's watch, Bank of America has undergone a dramatic transformation. It's cut more than $8 billion a year in annual operating expenses, sold off or shuttered numerous subsidiary operations, and closed rank around its bread and butter commercial banking and wealth management operations. Suffice it to say, as the drop in its trading revenue attests, its capital markets business didn't make the cut in terms of businesses that Moynihan has decided to focus on.