Kaplan University MBA, Economics for Global Decisionmakers

1. Global Operations of
Bank of America

2. Global Operations of Bank of America
Cathie Tedrick
March 1, 2011
GB540: Economics for Global Decision Makers
Instructor: Timothy Terrell
Kaplan University

3. Overview
One of the world's largest financial institutions.
Serves 57 million consumers and business owners.
Offers a full range of banking, investing, and other
products and services.

4. History
Started as a small bank in 1764 in Massachusetts;
now headquartered in Charlotte, NC.
Grown to over 5,900 retail locations due
to mergers and acquisitions.
Serves clients worldwide and is a publicly traded
company on the New York Stock Exchange.

5. Recent and Current
Operating Costs
Lost a lot during the recent financial crisis,
with Merrill Lynch and Countrywide bringing
their financial losses into the acquisition.
Despite the mounting costs in covering these
loans, a first-quarter profit of $3.2 billion was
reported in April 2010.
Created a unit to deal with 1.3 million bad
mortgages.

6. Economic and
Social Forces
The strength of the U.S. economy and factors like
interest rates, equity and debt capital markets, inflation,
and money supply all impact earnings
Affected by economy’s upswings and downturns:
 When the economy is down, there is a greater
likelihood that customers will default on loans.
 When the economy is up, people have more money
to deposit, invest, repay loans, get credit cards.

7. Political Forces
Three areas having the greatest effect on banking industry:
 Overspending: As with any budget, heavy spending in one
area means that other areas have to be cut back.
 Consumer spending: When consumers don’t spend, our
economy slows and puts pressure on the dollar.
 Uncertainty: Political change, huge spending, fear of
terrorism, takes attention away from economic positives like
corporate profits. This all adds up to an investment attitude
that’s more “wait-and-see” than free-flowing, a situation that
hurts the dollar.

8. SWOT Analysis
Strengths
 Diverse financial products. Provides range of
banking, investing, asset management and other
financial products and services.
 Market domination. Positioned strongly in the
market and has a variety of strengths which give the
corporation a distinct advantage over its competitors.
 Branding. Strong customer service position and has
branded itself as such.

9. SWOT Analysis
Weaknesses
 Subprime Issues. The largest consumer bank in
the country was also the fourth-largest subprime
lender in the country.
 Loss of trust from shareholders. The recent
acquisitions of Countrywide and Merrill Lynch have
put into question Bank of America’s leadership and
integrity.

10. SWOT Analysis
Opportunities
 Cross selling to customers. With many related
business lines, can offer a consumer coming with a
specific for one thing many other different products
and services.
 Consolidating industry. Can consolidate small,
successful, companies to bring quick earnings.
 Expansion in global markets. Experience higher
profits and revenue growth by expanding more into
the international markets.

11. SWOT Analysis
Threats
 Interest rates. Profit margins could be adversely
affected by increased interest rates.
 Consumer spending. Following the recession,
consumer spending and the interest charges on
credit card balances will decrease.
 Competition. Market share could be captured by
competing financial institutes improving their
business policies and strategies to attract the
Fortune 500 businesses.

12. Factors Needed to
Predict, Plan for, and
Adjust to in the Future
Employment/healthcare costs
 Over 280,000 employees throughout the world
Revenue growth
 Economists predict 2011 will bring better sales and
increased revenues and profits.
 As the number one bank in the world, more
companies will be seeking out their financial services.

13. Economic Indicators
of Most Interest
Gross Domestic Product
 When growth in GDP increases, this typically means
the economy is doing better.
 Companies are looking to startup or expand their
business. Bank of America provides lending to small
and medium-sized businesses grow and succeed.
Housing
 Most interest-rate sector of the economy.
 Monitor housing market for economy performance
and effects of changes in financial conditions.

14. Economic Indicators
of Most Interest
Employment
 The economy is improving when unemployment
falls, causing more consumer spending.
Interest Rates
 Because lending is such a large part of business,
they carefully consider rates set by the Fed.
Inflation
 Rate of change of the CPI is one of the key
measures of inflation for the U.S. economy.

15. Economic Indicators
of Most Interest
Stocks and Bonds
 Consumer confidence in the future is measured by
the current value of the country’s stock of capital.
 Financial institutions look to long-term interest rates
movement to reveal future activity level .
Export of Goods and Services
 Bank of America must pay close attention to how the
Gross National Product may affect the international
countries that they serve.

16. Strategies to Respond
to EI and Maximize
Revenues
Focus on providing loans for small and medium-sized
companies
 Companies will be helping to fuel economic growth by expanding
or starting their businesses which will create more jobs and
increase spending.
Develop community partners and increase loans and
investments to CDFI
 Help to grow businesses, especially in lower-income
communities; will create jobs and increase spending.
 Emphasize commitment to innovative programs and resources.

17. Global Operations
History
 The company is a long-established participant in
the European markets, with a presence since 1922.
 Between 1986 and 1987 BankAmerica made
significant losses as a result of a number of bad
loans in Latin America.

18. Global Operations
Current State
 The company’s largest department is Global Consumer and
Small Business Banking. This also includes ATMs in other
countries through the Global ATM Alliance.
 Provides comprehensive market, industry, product and advisory
expertise to more than 140,000 businesses around the globe:
Asia
Canada
China
Europe, Middle East and Africa
India
Latin America

19. Global Operations
Plans and Possibilities for the Future
 Incorporating more hip and hitech technology.
 Recently designed software platform unifies
trading, risk and pricing applications for foreign
exchange options, equities and commodities.
 Belongs to the Global ATM Alliance

20. Global Operations
Improving What They Do: E-banking
 Currently have 29 million online banking
customers.
 Online banking allows customers to do all of
their banking online, without ever having to
visit an actual brick-and-mortar bank branch –
all over the world.

21. Global Operations
New Venture: Mobile Banking
 The new Bank of America mobile banking app gives
customers a convenient way to access their accounts and
complete transactions. However, many are unable to use it:
One of the biggest challenges in mobile banking is
connecting to online banking infrastructure.
With recent mergers, Bank of America online banking is
operating on several different infrastructures.
To reach all consumers, the company must unify
infrastructures domestically and develop new ones globally.

22. Conclusion
Monitoring trends in the overall growth rate through
economic indicators helps the company to forecast
what activities will bring the biggest return.
The company’s membership in the Global ATM Alliance
gives their customers another benefit when traveling
around the world.
Continued investment in technology or online and
mobile banking positions the company to create
opportunities to grow and reach the new generation of
banking customers - both domestically and globally.

23. Resources
20 Hidden Ways the Iraq War is Affecting the US Dollar. Currency Trading. Retrieved from
www.currencytrading.net/features/20-hidden-ways-the-iraq-war-is-affecting-the-us-dollar/
2009 Annual Report. Bank of America. Retrieved from http://media.corporate-
ir.net/media_files/irol/71/71595/reports/2009_AR.pdf
2011 CFO Outlook. Bank of America. Retrieved on 2/12/11 from http://corp.bankofamerica.
com//publicpdf/products/abf/final_pdf.pdf
Asset-based financing new and resources. Bank of America. Retrieved from http://corp.bankof
america.com/public/public.portal?_pd_page_label=products/abf/news&panel=2
Bank of America. (2010). Helping small and medium-sized businesses to fuel the economy. Retrieved by
http://ahead.bankofamerica.com/fueling-economic-growth/helping-small-and-medium-sized-
businesses-to-fuel-the-economy/
Bank of America. (2011). Bank of America Announces Changes to Resolve Legacy Mortgage Issues and
Continue Building the Leading Home Lending Business. Retrieved from
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-
newsArticle_print&ID=1525073&highlight=
Bank of America Annual Report. (2010). Extending nearly $150 billion in credit for the first quarter, more
than any other U.S. bank. Retrieved from http://ahead.bankofamerica.com/moving-our-company-
forward/extending-nearly-150-billion-in-credit-for-the-first-quarter-more-than-any-other-u-s-bank/
Bank of America Corporation. New York Times. Retrieved from http://topics.nytimes.com/
top/news/business/companies/bank_of_america_corporation/index.html
Bank of America emphasizes its financial strength. Los Angeles Times. Retrieved from
http://articles.latimes.com/2009/feb/14/business/fi-bofamerica14
Bank of America Overview. (2011) Retrieved from www.bankofamerica.com/homepage/overview.go
Bureau of Economic Analysis. Retrieved from www.bea.gov/
Fundamental Analysis. (2011). Retrieved from
http://thismatter.com/money/forex/fundamental_analysis.htm
History of Bank of America. The Finance Owl. Retrieved on 2/27/11 from
www.thefinanceowl.com/banks/usa/bank-of-america/
McConnell, Brue, Flynn. (2008). Economics. McGraw-Hill Irwin.