Wells Fargo Securities Head of US Large-Cap Bank Research Mike Mayo Talks Bank of America

Summary

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Podcast Episode Summary

Podcast: Bloomberg Talks

Episode: Wells Fargo Securities Head of US Large-Cap Bank Research Mike Mayo Talks Bank of America
Date: November 3, 2025
Host: Bloomberg Interviewer
Guest: Mike Mayo (Head of US Large-Cap Bank Research, Wells Fargo Securities)

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Episode Overview

This episode features a timely conversation with bank analyst Mike Mayo on the eve of Bank of America’s first Investor Day in 15 years. The discussion focuses on Bank of America’s strategy under CEO Brian Moynihan, the need for renewed risk-taking and clear growth targets, and how the bank is positioned for the future. The latter part of the episode briefly shifts to Citigroup, analyzing CEO Jane Fraser’s leadership, issues of executive compensation, and comparison with other management styles.

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Key Topics and Insights

1. Bank of America’s “Responsible Growth” Strategy

• Background: Brian Moynihan has led Bank of America (BofA) since the post-financial crisis era, focusing heavily on steady risk management.
  • "I think Bank of America under Brian Moynihan have been great risk managers, but this decade they've not been great risk takers." (Mike Mayo, 01:03)
• Critique: The time has come to emphasize the “growth” aspect of “responsible growth.”
• Expectation: Mayo urges BofA to adopt a more “opportunistic risk mindset” to drive stronger returns and justify its high-quality franchise status.

2. Targets for Returns and Growth

• Current Performance:
  • BofA is a top player in retail and wealth management, yet has underperformed in less traditional activities like wealth management, credit cards, and trading.
  • "For being such a strong bank, they've underperformed in terms of growth of the less traditional activities." (Mike Mayo, 02:33)
• Investor Expectations:
  • Mayo is looking for the announcement of a clear return-on-tangible-common-equity (ROTCE) target:
    • “I’m looking for a new return target of about 16% to 18%. So how they get there and how they put some meat on the bones for those growth strategies will be very important this Wednesday.” (Mike Mayo, 01:43–02:15)
• Growth Execution Challenge:
  • The bank must translate its strong deposit base—over $1 trillion—into new revenue opportunities, leveraging technology and relationships.
    • “They've had 3 billion interactions with their Erica chatbot for the past decade. Talk about AI. So that's really working … The challenge and opportunity is to leverage those relationships to do more.” (Mike Mayo, 03:28)

3. Succession at Bank of America

• Leadership Spotlight:
  • The episode highlights the recent appointment of two co-presidents (“Dean and Jimmy”) and discusses CFO Alister.
  • These executives are now positioned as potential successors to Moynihan.
  • “It'll be the first time we get to see those two individuals in their new roles and they're overseeing jointly Bank of America's eight lines of business. So the question is how are they going to instill extra intensity, growth and accountability?" (Mike Mayo, 04:07)

4. The Importance of This Investor Day

• Significance:
  • With such a long gap since the last Investor Day, expectations are high for clarity on growth, technology, efficiency, and risk-taking for the coming decade.
  • "What is Bank of America's plan from now until the end of the decade? How are they going to improve their growth? … This should be one of the most efficient banks on the planet with all the tech and AI that they've done." (Mike Mayo, 04:55)

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5. Citigroup: Leadership, Compensation, and Culture

• Critique of Compensation Practices:
  • Mayo is outspoken about what he sees as excessive retention bonuses at Citi, especially in light of poor long-term shareholder returns.
  • “Citigroup CEOs have made, I think over $400 million in the last 25 years while the stock price has gone down 3/4 and the stock market's gone up 3X.” (Mike Mayo, 05:42)
• Jane Fraser’s Performance:
  • Despite opposing her retention bonus, Mayo praises Jane Fraser’s leadership and her “simple but powerful” new management accountability structure.
  • "Citigroup is my first, second and third top pick. So I love Citi stock. And I love what Jane Fraser has been doing. And I think they're going to succeed. But I might be wrong. And if I'm wrong, guess what? I'm probably going to make a lot less. And I think Jane Fraser should make less too. She shouldn't get a retention bonus now. At least until they get double digit returns." (Mike Mayo, 06:13)
• Call for Pay-for-Performance Culture:
  • Mayo draws a sharp line: deliver results before financial reward.
    • “It's kind of like you see someone in the gym ... but when it comes to game time, do they actually deliver? Next year is when they have to deliver.” (Mike Mayo, 07:16)

6. Are Management Consultants the Best Bank CEOs?

• Comparison between Jane Fraser (Citi) and James Gorman (Morgan Stanley), both former management consultants.
• Mayo gives nuanced take—no universal rule, but strategic consultants can bring valuable blueprints for complex organizations.
  • “It's not one size fits all … I think Jane Fraser, she has a great blueprint, architectural blueprint for how to run Citi for the next 25 years ... So I think that's a game changer for how Citi is going to perform and execute the next few years.” (Mike Mayo, 07:49)

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Memorable Quotes

• On Bank of America’s Risk Appetite:

  • “There is no skill in never taking risk. You don't want them going back to 2007 when they took too much risk ... So I expect them to have more of an opportunistic risk mindset going forward.” (Mike Mayo, 02:48–03:20)

• On Citi CEO Compensation:

  • “Citigroup CEOs have made, I think over $400 million in the last 25 years while the stock price has gone down 3/4 and the stock market's gone up 3X.” (Mike Mayo, 05:42)
  • “If I'm wrong, guess what? I'm probably going to make a lot less. And I think Jane Fraser should make less too. She shouldn't get a retention bonus now.” (Mike Mayo, 06:16)

• On Succession at BofA:

  • “It could be one of those two [co-presidents]. Alister, the CFO, is ... a very capable CFO. So I'd say those—it's a three person horse race to become … the next CEO.” (Mike Mayo, 04:27)

• On Strategic Leadership:

  • “She has a great blueprint, architectural blueprint for how to run Citi for the next 25 years with the five lines of business and holding the five CEOs ... accountable.” (Mike Mayo, 07:49)

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Timestamps for Key Segments

• Responsible Growth Approach and Need for Change: 01:03–02:15
• BofA’s Strengths and Growth Potential: 03:20–03:58
• Succession and Co-President Roles: 04:07–04:51
• Importance of the Investor Day and Bank's Plan for the Decade: 04:55–05:22
• Citigroup’s Executive Compensation and Leadership Culture: 05:42–07:34
• Management Consultants as Bank CEOs: 07:34–08:38

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Conclusion

This episode offers a sharp analysis of Bank of America’s inflection point—calling for more innovation, risk, and strategic clarity as investors look for improved returns and accountable leadership. Mike Mayo, both skeptic and supporter, pushes for higher standards at both Bank of America and Citigroup, distinguishing meaningful performance from mere promise. The episode is packed with industry insights, candid opinions, and clear expectations for the future of two of the world’s biggest banks.

Transcript

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[Interviewer / Bloomberg Host]

Radio news CEO Brian Moynihan is holding an investor day this week, his first in almost 15 years. Moynihan describes the firm's strategy as, quote, responsible growth. And now some analysts are wondering if that mantra will be enough to satisfy investors. One of those analysts, Mike Mayo. He is head of US Large cap bank research at Wells Fargo securities. And last week he was named number one large bank all star analyst for a sixth straight year by the actual poll. And Mike joins us now. Mike, great to see you.

[Mike Mayo]

Thanks for having me.

[Interviewer / Bloomberg Host]

So responsible growth, that's the stated strategy, has it just run its natural course and he's extracted all he can from that idea.

[Mike Mayo]

Well, you have to understand CEO Brian Moynihan of Bank of America took over after the global financial crisis and his main job was to steady the ship. I think bank of America under Brian Moynihan have been great risk managers, but this decade they've not been great risk takers. So I expect them to lean in more to the growth part of their responsible growth theme.

[Interviewer / Bloomberg Host]

Got it. Okay. So bank of America's argument is that it' working on it. It's catching up right now. It's already made clear that net interest income will be up 6 to 7% at the end of 2025. What do you hope to hear from the of management when they discuss all these targets on Wednesday?

[Mike Mayo]

Well, I think the most important target is what do you expect to have for returns? Bank of America has a premium franchisor number two in US Retail number two in wealth management, top five global investment bank. That's really good stuff. So why have their returns only been 14% decade? So I'm looking for a new return target of about 16 to 18%. So how they get there and how they put some meat on the bones for those growth strategies will be very important this Wednesday.

[Interviewer / Bloomberg Host]

Okay, that makes sense. And you're referring to the return on tangible common equity. And right now they've set a target, I guess of the high teens. It's currently at around.

[Mike Mayo]

No, they currently Bank America, I don't know of them to have any targets. So first of all, let's hear a target.

[Interviewer / Bloomberg Host]

Oh, excuse me. Analysts are expecting something.

[Mike Mayo]

Okay, so Yes, I think 16 to 18% seems reasonable but it's really the how are they going to get there is what's going to be important. And I think when it comes to traditional banking deposit taking, bank of America has excelled. But for being such a strong bank, they've underperformed in terms of growth of the less traditional activities. Wealth management, credit cards, banking, trading. Even total loan growth for the last 15 years has lagged at bank of America. So there is no skill in never taking risk. You don't want them going back to 2007 when they took too much risk. So this has been a risk off company in a risk going year to explain the stock price. So I expect them to have more of an opportunistic risk mindset going forward.

[Interviewer / Bloomberg Host]

You've mentioned the areas where they have room to grow. Where is it already strong? Where is it, you know, kind of delivering already to them to the way that it can, the maximum that it can.

[Mike Mayo]

Well, wow. I mean bank of America's $1 trillion of retail deposits, I mean that's those customers really love the service and have connections with, you know, automatic bill pay and you know, all sorts of interactions. They've had 3 billion interactions with their Erica chat bot for the past decade. Talk about AI. So that's really working. The bread and butter, the, the raw materials of a bank are deposits. That's worked really well. The challenge and opportunity is to leverage those relationships to do more.

[Interviewer / Bloomberg Host]

Okay, are we going to get any kind of insight into succession planning at bank of America? They're going to showcase some senior executives below the CEO chair according to our reporting.

[Mike Mayo]

Well to up the drama that the bar is low for bank analysts. Okay, that doesn't take much to have some drama. But they recently named two co presidents, Dean and Jimmy as we know them colloquially. It'll be the first time we get to see those two individuals in their new roles and they're overseeing jointly bank of America's eight lines of business. So the question is how are they going to instill extra intensity, growth and accountability to those eight lines of business. And so it could be one of those two Alister, the CFO is, you know, quality, very capable cfo. So I'd say those it's a three person horse race to become who the next CEO. And this will be a chance to the investment world to, you know, analyze them.

[Interviewer / Bloomberg Host]

So is it overstating things to say that this investor day is crucial to B of a future?

[Mike Mayo]

You know, I think this is the right time for bank of America's Investor Day is the first one in 15 years. So what is bank of America's plan from now until the end of the decade? How are they going to improve their growth? How are they opportunistically going to take risk? How are they going to improve their returns? And lastly, with this world and their experience with AI and technology, how are they going to improve their efficiency? This should be one of the most efficient banks on the planet with all the tech and AI that they've done. So that'll be really interesting to hear.

[Interviewer / Bloomberg Host]

All right, I also want to get your take on Citigroup because you have recently objected to the CEO and now Chairman Jane Fraser's her retention bonus. You call it the latest example of the firm paying in excess. So this is a, a company problem or a culture problem at Citigroup.

[Mike Mayo]

This is a 25 year old problem at Citigroup. Citigroup CEOs have made a think over $400 million in the last 25 years when the stock price has gone down 3/4 and the stock market's gone up 3X. So I've written about that. I wrote that in my book Exxon, Wall Street. I talked about it when I testified to the, the inquiry commissions related to the financial crisis. And I'd say in the case of Jane Fraser at Citigroup, Citigroup is my first, second and third top pick. So I love Citi stock.

[Interviewer / Bloomberg Host]

And you love what they've been doing.

[Mike Mayo]

And I love what Jane Fraser has been doing. And I think they're going to succeed. But I might be wrong. And if I'm wrong, guess what? I'm probably going to make a lot less. And I think Jane Fraser should make less too. She shouldn't get a retention bonus now. At least until they get double digit returns. At least until the regulatory consent order is lifted or at least let the year end. So I just thought that was at best premature to give her a retention bonus at this time. Even while I think this is a generational change in how Citi conducts business.

[Interviewer / Bloomberg Host]

Okay, so you don't object to her ascension to chair of Citigroup or anything like that? It's just kind of the prepayment of everything first.

[Mike Mayo]

Absolutely. And this again, this city has a long history. They implicitly failed five times the last century. Again, I write about this, my book, I write in my book about their poor pay for performance practices. I literally, when I put out a note about Jane Fraser, the recent retention bonus, I literally quoted by my book. And here we are 15 years later with some of these same bad practices. Now I understand it because she's probably the best CEO they've had, you know, in the new since the merger in 1998. But she still has to deliver. It's kind of like you see someone in the gym and they're, they're training really well and they're doing push ups and setups. But when it comes to game time, do they actually to deliver? Next year is when they have to deliver.

[Interviewer / Bloomberg Host]

You know, going back, you look at Jane Frazier. Her background is as a management consultant at McKinsey. And James Gorman was also a management consultant and he basically turned around Morgan Stanley. Are management consultants maybe better at running these big banks than most bankers.

[Mike Mayo]

Stop now. It's not one size fits all. As for those who remember, I mean I said the same thing about Morgan Stanley early last decade. There were my three top picks. Morgan Stanley, Morgan Stanley, Morgan Stanley. You have the clips on Bloomberg, you look it up and everyone said James Corbin wasn't a banker, wasn't a trader, he's a consultant, forget about him. Then all of a sudden, you know, he walked on water by the time he left. And you've had some bad consultants who became CEOs too. But I think Jane Frazier, she has a great blueprint, architectural blueprint for how to run Citi for the next 25 years with the five lines of business and holding the five CEOs, those line of business accountable. So it's a simple but powerful move that people underappreciate. So I think that's a game changer for how Citi is going to perform and execute the next few years.

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