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MarketScreener Homepage  >  Equities  >  Nyse  >  Bank of America Corporation    BAC

BANK OF AMERICA CORPORATION

(BAC)
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Bank of America : expands rewards program for existing customers

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06/22/2014 | 06:10pm EST
Customers are seen outside of a Bank of America in Tucson

NEW YORK (Reuters) - Bank of America Corp will announce on Monday it will lower the threshold for consumers who qualify for discounts on loans and other benefits as the No. 2 U.S. bank seeks to win more business from existing customers.

Clients who have at least $20,000 in deposits and investments at the bank will be eligible for the benefits, according to an advance announcement reviewed by Reuters. The changes will be phased in starting this week.

Previously, the threshold was a minimum of $50,000 in deposits and investments.

The bank is offering lower rates on mortgages and home equity loans, higher interest rates on savings accounts and free stock trades to members of its new "preferred rewards" program.

The new benefits are part of Chief Executive Brian Moynihan's push to broaden the array of products and services to current customers as the bank struggles to boost overall revenue. He has pressed executives in different parts of the bank to work together to sell, for example, brokerage services to investment banking customers.

Among the areas of focus are households with some savings, but not enough wealth to be served by brokers at Bank of America's Merrill Lynch unit, or private bankers at its U.S. Trust unit. In 2011, Bank of America set up a "preferred banking" group to focus on these customers, known as "mass affluent."

As part of this effort, the bank has hired thousands of investment advisers within its retail branches and developed Merrill Edge, an online brokerage focusing on the mass affluent that has amassed $100 billion in assets under management in four years.

"We have re-pivoted our entire organization on these clients to better serve them," said Dean Athanasia, the executive in charge of preferred and small business banking.

Other banks look to attract these customers, too. Citigroup Inc waives fees and discounts loans to customers with $50,000 in balances at the bank through its Citigold program.

Compared with retail account holders with little savings, Bank of America's preferred banking customers "are anywhere from three to four times more profitable, and they have upside potential to grow more and more with us," Athanasia said.

Mass-affluent customers hold $600 billion in assets at the Charlotte, North Carolina-based bank, and they also hold $5 trillion in assets at other financial institutions, which represents a "huge opportunity," he added. The preferred banking group drove approximately $935 million in new money to Merrill Lynch Wealth Management and U.S. Trust in 2013.

Preferred rewards will be introduced to customers in four phases and is expected to be available across the United States by the beginning of October.

(Editing by Matthew Lewis)

By Peter Rudegeair

Stocks treated in this article : Citigroup Inc, Bank of America Corp
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION -1.70% 33.54 Delayed Quote.-4.77%
CITIGROUP INC. -1.73% 78.42 Delayed Quote.-1.84%
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Financials (USD)
Sales 2020 92 151 M
EBIT 2020 38 672 M
Net income 2020 25 773 M
Debt 2020 -
Yield 2020 2,37%
P/E ratio 2020 11,1x
P/E ratio 2021 10,2x
Capi. / Sales2020 3,22x
Capi. / Sales2021 3,15x
Capitalization 296 B
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Mean consensus OUTPERFORM
Number of Analysts 29
Average target price 36,93  $
Last Close Price 33,54  $
Spread / Highest target 43,1%
Spread / Average Target 10,1%
Spread / Lowest Target -16,5%
EPS Revisions
Managers
NameTitle
Brian T. Moynihan Chairman, President & Chief Executive Officer
Catherine P. Bessant Co-COO & Chief Technology Officer
Thomas Kell Montag Co-Chief Operating Officer
Paul M. Donofrio Chief Financial Officer
Thomas J. May Independent Director
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