CHARLOTTE, N.C. ( TheStreet) -- Bank of America (BAC - Get Report) is on a better track with its reinvigorated business strategy, but mistakes from the past will keep the bank's profit on shaky ground for some time.
Bank of America CEO Brian Moynihan has outlined his broad plan to pursue new business in high-growth emerging markets, and develop better relationships with wealthy clients in mature markets. He left this week for a trip to China, according to The Wall Street Journal, in an effort to build ties with leaders and business partners there.
But Bank of America is a laggard in respect to its newfound priorities abroad, and it will take time and effort to catch up. Major competitors are either already established in China or nearly so.
Approval is needed from Chinese regulators before foreign banks can establish a major retail banking presence there, something Citigroup (C - Get Report) did some time ago. When it comes to capital markets activities, such as underwriting stock and bond issuance, Goldman Sachs (GS - Get Report) already has permission to do so, as do several European banks. JPMorgan Chase (JPM - Get Report) is reportedly in talks to form a joint venture that would allow it to expand its investment banking operations there as well.Instead of going that same, more difficult route in pre-crisis years, Bank of America had acquired a minority stake and a board seat at China Construction Bank. It also opened a branch in Shanghai, but didn't really make much of an effort to capitalize on opportunities in the fastest growing global market. Bank of America sought growth instead by buying up huge American targets and expanding its franchise coast-to-coast. It became No. 1 in nearly every retail banking category, including mortgages, credit cards and deposits -- a title that does little good while the economy suffers and consumer credit remains a drag on bank balance sheets. Moynihan acknowledged as much in a presentation earlier this month, outlining Bank of America's path forward. "In the past our consumer strategy was to be a sales machine and to measure success mainly on a number of products sold. This served us well," he said. "But as our market share rose and the economy fell, the strategies resulted in ... too many products sold to customers which weren't working for them."