(Bloomberg) — When Bank of America Corp. recently elevated its next class of senior executives, one name was conspicuously absent: Fab Gallo.
Few would have bet against the marathon-running head of the firm’s global equities division, especially after he set a revenue record early this year amid the messiest markets in a generation. Yet after a leaked recording of a conference call thrust Gallo’s blunt communications style into the public, and turbulence emerged in parts of his business, the bank’s bosses left him behind.
While eight colleagues got invited to join the firm’s elite management team in late July, Gallo was told to split duties with a former subordinate.
The snub has drawn attention across Wall Street, turning a spotlight on an executive known for pushing subordinates especially hard. It has since prompted discussions between him and senior executives about how long he will remain at the investment bank, according to people familiar with the situation who asked not to be named discussing personnel. Another solution could still be found.
Gallo, 54, referred messages to a company spokesperson who declined to comment.
The trading veteran was passed over as Bank of America unveiled a series of promotions and added executives to its most senior decision-making body. New members of the panel include his longtime counterpart overseeing fixed-income markets, Jim Demare, who rose to head the global sales and trading division. One of Gallo’s subordinates, Soofian Zuberi, was promoted to jointly run the stock-trading business alongside him.
‘Great Job’
It marked a rapid change in fortunes for the industry veteran whose operations were credited with rising to unprecedented challenges posed by the coronavirus pandemic in March, when traders were forced to work from home just as markets went into a nose dive.
By the end of the first quarter, the equities-trading division’s revenue jumped 39% to a record. In May, Chief Executive Officer Brian Moynihan praised Gallo for the “great job” he was doing alongside fixed-income chiefs Demare and Bernie Mensah, who also was elevated to join the management team. In the second quarter, equities revenue rose 7%, fueled by cash and client financing.
Yet there were also bumps. In April, someone leaked a recording of a controversial conference call to media outlets including CNBC and the New York Times. On it, Gallo could be heard saying “critical” workers wouldn’t be able to stay away from the office too long during the pandemic. The bank said at the time that the conversation was about returning people to the office once officials deemed it safe, and that the company was “sparing no expense or consideration taking care of our people.”
Then in a second-quarter regulatory filing, the bank flagged “weaker trading performance” in the unit’s derivatives business. Though that business grew versus the previous year, it lost more than $100 million on some positions held in Europe, the Middle East and Africa, according to people with knowledge of the matter. The company’s broader European business has seen a series of shakeups, most recently naming Martina Slowey to run equities for EMEA, replacing Julien Bahurel, who will leave after a transition period. That follows the June departure of Andrew Mitchell, head of equities trading in the region.
Frustrating Managers
Gallo, whose full first name is Fabrizio and goes by Fab, is known to frustrate his managers with a domineering style, getting deeply involved in trades and personnel decisions rungs below him, according to bank employees. That includes intervening in reviews for members of trading desks, sometimes overruling assessments drafted by the managers under him.
A voracious reader, he cuts the image of a cultured intellect. He’s also seen as arrogant. Colleagues say that in moments of frustration over the years, Gallo has lashed out at subordinates, calling them dumb. That and his blunt communication style have created detractors within the division, who accuse him of being unnecessarily abrasive.
Some Bank of America employees also took umbrage at the leaked recording of Gallo. On it, he could be heard telling staff that if they wanted to keep critical roles, they would need to “make a decision” about coming back to the office, CNBC reported in April.
“We cannot provide proper and orderly markets if 99% of the population decides they don’t feel comfortable,” Gallo said on the recording. “You cannot on one hand say you cannot trust the firm and on the other hand get the money from the firm, for a long period of time if you are in a critical function. Now if people decide they don’t want to be in a critical function we can have that conversation too.”
Bank’s Image
The remarks came amid a debate inside many Wall Street firms over who could stay home and for how long. Yet those words didn’t quite gel with Bank of America’s efforts to remake its public image as a good corporate citizen after the 2008 financial crisis. Moynihan has been a prominent voice from the business community during the pandemic, pledging to support staff through tough times and resisting headcount reductions. He’s also highlighted the lender’s forbearance activities, its participation in the government’s rescue-financing program for small businesses and a $1 billion pledge to communities of color over four years.
Gallo joined the bank in 2011 from hedge fund Brevan Howard Asset Management LLP and also spent more than a decade at Morgan Stanley, serving as head of equities and global proprietary trading.
Despite his senior role, he keeps a relatively low profile. One of the few public references to Gallo is at the University of Chicago, where there’s a dorm named after him. He contributes to financial aid and career programs there.
His almost-decade-long run as sole head of equities was remarkable for its duration in an industry where co-chiefs are often the norm, forcing executives to compete and leaving firms with leadership options if businesses don’t perform. Before the latest management shuffle, Gallo reported to the bank’s chief operating officer Tom Montag, who’s also president of its global banking and markets unit. If Gallo stays after the promotions, he will report to Demare.
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