While Goldman Sachs examines its navel in search signs of where its once great fixed income sales and trading business went wrong, a defector whom the firm passed over as president ten years ago has taken on a cult-like status at its rival. Tom Montag, the former co-head of Goldman's securities business, is Mr Bank of America Merrill Lynch.
Bank of America declined to comment for this article, but BofA insiders and sources who've worked with Montag say the COO rules the global banking and global markets businesses with an iron, if eccentric, fist.
A former co-head of Asian equities and fixed income currencies and commodities at Goldman Sachs, Montag - who's based in the New York - is said to travel for up to 40 weeks of the year, often to Asia, which he takes a keen interest in.
Montag is doing something right, though. In 2017, Bank of America's fixed income market share was 12.5%, according to analysts at KBW, putting the bank in third place behind J.P. Morgan on 18.1% and Citigroup on 16.8%. Goldman Sachs, Montag's employer for 22 years, languished at 7.3%. While Goldman and J.P. Morgan both lost FICC market share last year, Bank of America - like Morgan Stanley and Citi - gained it.
BofA's fixed income success can be partly attributed to its strong corporate client base. However, as COO with an all-encompassing responsibility for BofA busineses that "serve companies and institutional investors" and for the "global research and global markets sales and trading business", as described in the bank's recent proxy report, Montag deserves some of the credit too. Under his watch, BofA has developed 'Quartz', a risk and pricing system similar to SecDB at Goldman Sachs. It's also rationalized its technology platforms, cut costs and improved its U.S. middle market franchise - something Montag was talking about in June 2017, well before Goldman started doing the same in November.
Despite rumours of "strain" in the relationship between Montag and BofA CEO Brian Moynihan, Moynihan has praised and promoted the man who may one day take his job. In 2015, Moynihan credited Montag with being "really smart" and in July last year he praised Montag and his team for taking costs out of the trading business. In 2017, Montag was paid less than Moynihan with $19m to his boss's $23m, but this hasn't always been the case: Montag regularly out-earned Moynihan between 2010 and 2015.
A table released in a 2016 court case showing pay rates for senior markets staff at Bank of America suggests Montag amply shares the BofA bounty among his senior lieutenants. However, not everyone at BofA is enamoured of the big boss. "He fixed the business by streamlining costs, but he created fear," says one BofA salesman. "It's been all about closing the gap with Goldman Sachs and there's been constant pressure," he adds. "We were given very challenging targets and it made for an unpleasant and threatening environment."
Insiders say Montag's already large presence is writ larger by daily and weekly reports bearing his name and that together with Montag, Sanaz Zaimi, the ex-Goldman Sachs head of fixed income and Fab Gallo, the ex-Morgan Stanley head of equities, run a business that can be highly politicized. Eyebrows were raised when Zaimi hired her brother, Alireza, in 2014 (he left for Saudi Arabia's sovereign wealth fund last October). In turn, Gallo has been accused of favouring colleagues he's hired-in from Morgan Stanley.
"Montag's a huge character," says one headhunter. "And he likes to hire other characters. You have a lot of "interesting" people in senior roles at Bank of America and it can be very political there. The culture is very, very aggressive and very performance driven."
Montag's character was reportedly on display at a recent event led by Moynihan at Disney World in Orlando. "Montag spent his slot on the stage mostly talking about roller coasters and sharing pictures of himself on them," says one BofA banker.
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