What to expect when Michele Foresti goes into action at BofA
Michele Foresti has arrived. We have it on good authority that the ex-head of rates and European flow credit trading at Deutsche has now appeared at Bank of America, where he will be head of fixed income currencies and commodities (FICC) trading for Europe the Middle East and Africa (EMEA). Foresti's manifestation isn't official yet as he's still being authorized by the UK Financial Conduct Authority (FCA), which is known for taking its time, but he's certainly in the building somewhere.
What can BofA's FICC bankers expect from Foresti once he has all the necessary permissions? BofA declined to comment for this article and failed to shed any light on his plans. However, headhunters suggest that Foresti - who's effectively achieved a gigantic promotion at BofA after 17 years at Deutsche, could shake things up a little - if he can navigate BofA's complex internal politics.
BofA's FICC trading business is run by David Sobotka, a Merrill Lynch veteran who's been with the bank since 2004 and became sole head of trading at BofA in September 2013. However, the power in BofA's FICC business still rests with Thomas Montag, the ex-Goldman trader who became BofA's co-chief operating officer in 2011.
Last September, Sobotka (likely directed by Montag) promoted William Roberts to be BofA's global head of rates and credit trading. Like Montag, Roberts joined BofA from Goldman in 2011. Widely seen as a rising star at BofA, Roberts is part of Montag's ex-Goldman clique. Like Foresti, he's a structured credit and rates trader by profession and like Foresti he'll have ideas for shaking up the rates and credit business. Foresti will therefore need to work closely with Roberts if he wants to get ahead. He will also need to work with the other ex-Goldman bankers in BofA's FICC team - think Sanaz Zaimi, co-head of sales, who joined on a reputedly large guaranteed bonus back in 2009.
Although Foresti's budget and hiring intentions remain unclear, FICC headhunters say some recruitment seems inevitable. "The whole point of hiring someone at that level is that you want them to change things. Or course he's going to bring people in," said one, speaking anonymously. BofA's rates traders have most to fear. Earlier this year, BofA mysteriously parted company with Yunho Song, head of its rates and currencies business shortly before bonus time. BofA's rates traders were reputedly paid disappointing bonuses last year, and with rates revenues falling that business looks ripe for layoffs or 'upgrades.'
BofA's credit professionals have been performing better, but have concerns of their own. They have reportedly been worried at the possibility of a merger with the rates business. At Deutsche Bank, Foresti hammered rates and credit together into a single unit, stating, "We think that keeping asset classes separated is not the right choice and other investment banks will eventually follow this model." However, this move reportedly led to upset in Deutche's credit business, which felt it had been corralled by Deutsche's rates professionals into a structure where they were dominant. "I think it's been a disaster. Most credit people have either gone or are looking to leave, it's really bad," a Deutsche credit veteran complained to Reuters last year.
Fortunately for BofA's credit team, Foresti may find his ability to act restricted, however. Headhunters say BofA's credit professionals have been reassured that there won't be any merging of the two businesses under the new EMEA leader. "There were some concerns about this, but it's been made very plain that it won't be happening," claimed one. This was not confirmed by BofA, however.
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