Bank of America at Barclays Conference Notes

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Christian Meissner – Head Investment Bank

Significant improvement since beginning of the year

” the third quarter again is proving to be a better quarter from a revenue and activity perspective than the second quarter has been. So, from that perspective, a clearly difficult environment in aggregate, but I would say, a very tough start at the beginning of the year with significant improvement since then.”

Banking is a very very profitable business

“Banking is a very, very profitable business. Having said that, we also have challenges, of course, the most important one being that a higher or better rate environment would benefit our treasury business. As I mentioned, the loan markets, while growth has been okay, clearly profitability has been under pressure given the global liquidity environment and given the amount of capital that is chasing those assets and to get that we are trying to invest as well. So, we are trying to balance all these factors.”

Have been shifting from inward facing to outward facing hires

“as people have been rolling off the platform, we have been able to hire new coverage bankers, new sales people and effectively been able to shift the mix of our population of our people from a little bit more inward-facing to a little bit more outward-facing. So again, as I have mentioned before, we have been able to effectively therefore work within the parameters of a pretty tight expense environment in terms of investing in our people. ”

Rising rates are good for us

“overall, rising rates are good for us given the setup of our asset and liability mix. That’s obvious, I guess. And equally, as it relates to the bulk of the commercial loan book, given the way it’s structured, net-net, we actually don’t think that there is an incremental negative by rising debt spread.”

Momentum has picked up a little in M&A but growth has definitely slowed

” I would say the M&A environment, the M&A momentum in terms of the types of things that companies are thinking about and types of deals that are being announced. I think it’s picked up again a little bit after a lull over the summer. Some of that by the way, is also seasonal, so it’s not that surprising that the third quarter is a little bit of a low point from that perspective. So overall, I would say again, nothing really to add to what you have said. It’s a little bit of a tale of two cities. On the one hand, the underlying growth isn’t bad, but you have a couple of counterbalancing factors, the net result is that growth has definitely slowed.”

Largely through the changes in leverage lending guidelines

“Well, the leverage lending guidelines had a big impact on our business a couple of years ago when they came out. And I think it’s fair to say that it took the markets a little bit of time to adjust. It’s also fair to say that the playing field perhaps wasn’t entirely level. But I would say now, a couple of years on, we have been – we are largely through that. And I think both we and the system overall has adjusted for it. And frankly, in a positive way, taking down risk in the sector, taking down risk in the business and ultimately what I think is ironic is that the same market leaders that have the largest share pre-lending guidelines still do today, albeit the business looks very differently.”