BofA Retools Troubled Japanese Credit Business

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BofA Retools Troubled Japanese Credit Business

Bank of America has added a layer of management in an effort to revitalize its troubled Japanese credit derivatives business. "There was a false start," said William Fall, global head of structured products in London and the regional head of the global markets group, referring to the establishment of a credit derivatives operation in Tokyo last year. The operation failed to take off because BofA did not have the right people for the job, he added. Fall flew into Tokyo two weeks ago for an extrodinary meeting with local managers. A derivatives professional who recently left BofA, said Fall is an exceptional market leader and will make a success of the business. In the reorganization, Kenichi Tatsuzawa, head of global markets for Japan, now reports to Fall. Previously he reported to Duncan Goldie-Morrison, head of the global markets group and responsible for the bank in Asia. Tatsuzawa was traveling and did not respond to voicemail messages on his cell phone.

Fall said he has authorized Sal Amery, head of the structured products group in Japan, to hire up to eight staff, including structurers and traders. "It's currently too small," noted Fall.

Recent departures from the credit derivatives group in Tokyo include Ralph Orciuoli, managing director, who joined Bear Stearns (DW, 3/31), and Yuji Mizuno, v.p. of the structured credit products group in Tokyo, who resigned last week.

Two market professionals said BofA's fixed income group has failed to achieve traction in Japan because the firm internally gives the country the same credit rating as Turkey (B1/B) whereas the rating agencies rate Japan Aa1/AA. This puts BofA at a significant disadvantage to other foreign banks because its ability to extend its balance sheet to Japanese customers is limited, they explained. Fall denied that the bank gives Japan a rating that is significantly different to the rating agencies, but declined to divulge the rating in uses.

One of the professionals added that BofA's fixed income group was overly bureaucratic and said the firm was known internally as "Bank of Japan" because its management culture has more in common with a Japanese organization.

In a separate move BofA decided to close its equity derivatives operation in Japan last month (DW, 3/8).

 

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