Bank of America, which posted an $8.8 billion loss for the second quarter, is to consolidate its wealth management business outside the US as part of an efficiency drive that will see it cease to manage client money outside 20 “core” regions that cover 77 countries, this publication can confirm. 

The move will produce a 3 per cent cut in non-US assets under management, BofA told Family Wealth Report, although it is understood that efficiencies to be gained from the changes are designed to boost profitability and margins. 

“It [the changes] had been on the cards for a while,” the spokesperson said, but did not identify which specific offices or countries would be affected by the moves.

Globally – including the US business – BofA’s wealth business oversees around $1.5 trillion in assets, making it the world’s biggest wealth manager by size, with Morgan Stanley Smith Barney in second place and UBS in third position (source: Scorpio Partnership).

The US-listed firm has enjoyed improving fortunes in its wealth management business. Net income rose to $506 million at its Global Wealth and Investment Management business, it said. The overall banking group’s loss was related to charges related to the resolution of “nearly all” of the legacy issues surrounding Countrywide-issued residential mortgage-backed securitization repurchase exposures.

The adjustment to the wealth management business will not affect the US, a spokesperson for the bank said. The international region covers Europe, Middle East and North Africa, and Asia-Pacific.

The announcement highlights how even a major player such as BofA’s wealth management firm – which uses the Merrill Lynch brand – is battling to protect margins as regulatory and other costs rise. A report in July by Scorpio Partnership, the consultants, said the average cost-income ratio for firms has risen to around 80 per cent.