CHARLOTTE, N.C.(Reuters) – Bank of America Corp (BAC.N) is reducing its private equity investment business to prepare for a changing regulatory landscape, a move that affects roughly 30 employees.
U.S. banks are under new regulatory pressure to rid themselves of private equity investment ventures.
The new financial reform law signed by President Barack Obama this week caps the size of banks’ investment in private equity at 3 percent of their capital. But the banks have years to comply with the new rule.
Bank of America spokesman Jerry Dubrowski said the moves were part of a continuing corporate strategic review and an effort to better prepare for upcoming international bank capital rules known as BASEL III.
Jason Cipriani, head of the bank’s strategic funds investments, will take 10 employees and form a Charlotte office for New York-based investment firm Sterling Stamos.
Sterling Stamos will manage a $1.9 billion portfolio of private equity investments Bank of America sold to AXA Private Equity in April.
Separately, Travis Hain, a managing director who oversees direct corporate investments, will take 20 employees and form his own firm. Hain’s group was previously part of Bank of America’s private equity investment business before the company bought Merrill Lynch.
On Thursday, the Wall Street Journal reported Bank of America also planned to sell its $1.2 billion commitment to funds managed by Warburg Pincus LLC [WP.UL].
As of June 30, Bank of America’s global principal investments unit investments totaled $14.8 billion in assets, down from $15.9, billion in the first quarter. (Reporting by Joe Rauch; Editing by Derek Caney and Lisa Von Ahn)