http://www.charlotte.com/mld/charlotte/ ... 035390.htm

Posted on Fri, Jul. 14, 2006


BofA still has room to grow
Key executive eyes expansion beyond acquisition


Nearly three out of every five dollars Bank of America Corp. makes in profit come from the consumer and small-business banking unit.

The executive in charge of raking in all that money -- $7.2 billion in 2005 -- is Liam McGee.

He'll bring in even more this year now that Bank of America is the nation's biggest credit card issuer, thanks to its purchase of MBNA Corp.

While much of his domain has increased through acquisition, McGee wants to add more business through internal growth -- banking's much desired but often elusive holy grail.

Still, the Charlotte-based bank has lured new customers with its "Keep the Change" savings program, has worked to lend more to small businesses, and has sold more home equity loans.

"We may be big, but we are still small in some ways in some businesses," he says. "We really have almost limitless ability to grow."

McGee, an Irish immigrant who speaks Spanish, is one of a few remaining executives from California's BankAmerica Corp. He moved to Charlotte in 2004 and is seen as a possible successor someday to Chairman Ken Lewis.

Liam McGee's hourlong conversation with the Observer this week was edited for brevity and clarity.


Q. Bank of America has almost no retail presence outside the U.S., but with the MBNA merger, you gained a credit card business in some countries. Are you interested in expanding to other retail products?

We have a very significant (credit card) business in the United Kingdom -- No. 2 market share in the U.K., No. 2 market share in Ireland -- a growing business in Spain, and a good solid business in Canada. I think there are two questions that we're looking at. One is MBNA really built those businesses from scratch. They know how to do it. Our leaders now know how to do it. And the first question we're looking at is: Are there other countries we should consider? We'll explore that. And secondly, in those countries where we offer credit cards: Are there other products we can add to complement that? We are exploring that as well.

Q. Some analysts have suggested Bank of America could save money by starting a credit card network to compete with Visa and MasterCard. Is it something you're interested in?

What I will say is we appreciate and value our relationship with Visa, MasterCard and our new relationship with American Express. It would be very difficult to do a network, but in the future, we'll evaluate all options. But I would say today it would be very difficult to accomplish that.

Q. You've said about 93 percent of the Hispanic population is in your footprint and how important that is to your growth. Talk about the typical customer you are looking for in that market.

If you look at the demographics of the U.S., we believe 80 percent of the net new population growth in the next 10 years will be either Hispanic, Asian American or African American. Specifically, Hispanics should be 60 percent. So the demographics are very compelling, particularly in our markets. So if you want to be a growth company and serve your communities and your customers, the Hispanic population is very much one we need to serve in a world-class fashion. What we're all about, and it's why I love this business, is we're about making members of our communities' dreams come true. I think it's our responsibility and our opportunity to acquire as many customers as we can. It's up to us to build a relationship that will be beneficial to them, whether their dreams are to buy a home, save money to start a business, save money to put their children through college. I think those are very much a part of the dream of everybody that lives in our country, as opposed to profiling certain subsets of people that are more or less attractive.

Q. Talk about how well positioned you are to provide retail financial services to lower-income communities. A lot of the Hispanic population is not particularly affluent. You have not for the most part emphasized subprime lending products, you have not always emphasized entry-level products. How will you serve those communities, as opposed to, say, Wal-Mart or check cashers or money transfer stores?

First of all, if you take a look at our banking centers in markets that have high concentrations of low-income residents, as you describe it, whether they be Hispanic, Anglo or whatever, you're going to find us with a significant density of distribution, typically more than anyone else. I think that's our foremost advantage. We are in those communities. In particular, as it relates to the Hispanic market, our reinventing of the money remittance business, our focus on associates who not only are of the ethnic groups but who speak the language -- 55 percent of the associates that we hire in any given month are diverse and bilingual -- I think those are all evidence of our commitment to it. We will have to continue to evolve.

Q. There has been a big debate lately on immigration reform in the country. A lot of these immigrants who are coming to the U.S. may not be legal. How do you deal with that?

We are very strict about requiring the identification that is stipulated by the law, including Matricula Consular cards. Again, I would say our great opportunity and what makes Bank of America a special company is about making the dreams come true of our residents, and I'll leave the political debate to the politicians.

Q. There are any number of political debates that Bank of America expresses opinions about. This one has tremendous ramification for your customers ...

As I said, I think on this issue we haven't taken a position, and we'll leave it to the politicians.

Q. Do you think it's in the interest of your shareholders to serve illegal immigrants?

I think I'll stand on what I just said.

Q. What do you think about Wal-Mart's efforts to get into the financial services business?

If they enter into mainstream banking, that could be challenging for some players. I also think, let's not underestimate the requirements to get into everyday banking. Banks like us have significant investments in infrastructure -- check processing, ATMs, online. So it wouldn't be a cheap proposition in terms of capital needs and incremental expenses. We welcome competition. If Wal-Mart came in, their biggest impact would be on some companies that may not be as efficient as others around the low price, everyday value proposition.

Q. Do you think you have any vulnerability?

I think when you look at our size, scale, efficiency relative to others in the business, that would stand us very well competing against anybody that might use price as an exclusive differentiator.

Q. How do you pursue growth in an environment where you can't really acquire retail properties?

Actually, we have almost limitless ability to grow, and we don't need to acquire to grow. If you look at certainly the affinity banking and the sale of credit cards, that's a tremendous growth opportunity for us. Secondly, we have made significant progress in the home equity business, now being the market share leader. The way I look at that, while we have an 8.5 percent market share in home equity, we have 13.5 percent market share of deposits. A reasonable goal for us is to match our share of home equity to deposits.

Q. If organic growth is a preferable strategy to acquisitions, why have you pursued acquisitions?

I think great companies do both.

Q. Would like you to see the 10 percent cap on total U.S. deposits lifted?

I'm not really going to get in a policy debate on that. I think that we have stated that perhaps the definition of how the 10 percent is calculated could be subject to expansion, but the 10 percent cap is probably likely to stay as it is.

Q. Where are you at in your building of new bank branches?

I think we have been a steady builder of new stores. We did a few more in the first few years because on the heels of a couple mergers and acquisitions some of it was a bit of catch-up. Right now it's an essential part of our strategy to be sure we always have the best distribution system possible. So if you watch us, we are only building in markets where we had good density -- the Southern Californias, the Las Vegases, the Phoenixes, the Atlantas -- in those areas where there is emerging growth.

Q. Is the value of the physical locations diminishing at all?

The banking centers are still where we acquire 95 percent-plus of our new customers. Customers, both consumers and businesses, speak pretty loudly with their behavior.

Q. Eventually Ken Lewis will retire. Your name comes up as a replacement. What's next for Liam McGee?

I've got more than enough to do. I'm very excited about the future prospects (of the consumer bank).

Liam McGee

• TITLE

President, Global Consumer and Small Business Banking.

• AGE

51

• CAREER

He joined predecessor BankAmerica in 1990, and past jobs have included running the California bank. He began reporting to Ken Lewis in 2004.

• EDUCATION

Graduate of the University of San Diego; master's degree in business administration from Pepperdine University; law degree from Loyola Law School.

• HOMETOWN

A native of County Donegal, Ireland, he grew up in Southern California.

• COMMUNITY INVOLVEMENT

Member of the National Urban League board of trustees and the Arts & Science Council board of directors in Charlotte.

• FAMILY

Wife, Lori; four children.

• ON CHARLOTTE

"I love living in Charlotte. We're very happy here. People have been so welcoming and warm."

• HIS PASSIONS

Traveling, family, arts and sports. He's a longtime Los Angeles Lakers fan, and the family has planned a trip to Europe, probably Italy, later this year.