Sept 10 (Askume) – Bank of America Corp (BAC.N) Chief Executive Brian Moynihan on Tuesday praised Warren Buffett as an investor in the company but said he has not invested in the giant when asked by a reporter about recent changes in its shares.
“He’s been a great investor in our company and he’s stabilized our company,” Moynihan said of Buffett at an investor conference in New York. “I don’t know what he was doing because obviously we couldn’t ask.”
Buffett’s Berkshire Hathaway (BRKa.N) , the biggest shareholder in Bank of America, has been reducing its stake in the U.S. bank, with stock sales totaling about $7 billion since mid-July.
Berkshire Hathaway owns about 11.1% of Bank of America, according to LSEG data.
Moynihan said the market is absorbing Buffett’s stock sell-off.
He also addressed proposed changes to capital rules, after the Fed’s supervisory chief on Tuesday outlined a plan to raise big banks’ capital to 9%, significantly higher than previous proposals, after facing strong opposition from Wall Street.
Moynihan said the proposed changes were manageable for Bank of America and that it would continue to buy back stock, but he warned that higher capital requirements for big banks could lead to lower lending.
He said, “If our capital had increased by 10%, we wouldn’t be able to make $160 billion in loans. Those loans would be made to small businesses and middle-market companies at competitive rates.”
Turning to third quarter results, he said investment banking revenue is likely to be around $1.2 billion, up slightly from $1.18 billion in the same period last year.
Middle-market investment banking (deals less than $1 billion) is growing at a strong double-digit rate, Moynihan said.
Trading revenue would grow by low single digits in the third quarter, he said.
Rival JPMorgan Chase & Co (JPM.N) said it expects trading revenue to be flat or rise 2% in the third quarter, while Goldman Sachs’ (GS.N) chief executive said on Monday the bank’s sluggish conditions mean trading revenue for the last quarter month will be on target and the quarterly decline could be 10%.
