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) --

Bank of America

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is an investment banking power all of a sudden, and the board had better think about this as it looks to replace outgoing CEO Ken Lewis.

BofA's acquisition of Merrill has caused all kinds of trouble for Lewis and other BofA executives for their failure to tell shareholders about bonus payments and unanticipated multi-billion dollar losses that emerged at Merrill ahead of the deal's close. But the numbers are clearly telling a different story.

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BofA ranks second in global investment banking revenue year to date through Tuesday, according to data provider


, behind only

JPMorgan Chase

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and ahead of

Goldman Sachs

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Morgan Stanley

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. That compares to BofA's 10th place ranking through the first nine months of both 2008 and 2007.

A report Tuesday by Sandler O'Neill analyst Jeff Harte cites "stronger than anticipated" third-quarter investment banking and trading revenues, which "suggest successful to-date merger integration efforts" between the two banks.

Harte told

the third-quarter data provides further confirmation of a trend that has been taking shape for several months following widespread departures by legacy Merrill Lynch executives at the start of the year, including former Merrill CEO John Thain and President Greg Fleming.

"Right after the merger closed, every headline you read was about people leaving," Harte says, noting, "there were more departures than I'd like to have seen."

However, as the year has gone on, Harte says: "All of a sudden they're getting their share of the deals and then some, and trading revenues are coming in better than expected without the brain drain."

The success is a radical departure for BofA, which has long had a division between its largely New York-based investment bankers and its commercial bankers in Charlotte. Ken Lewis has often said his infamous statement about having had "all the fun

he can stand" in investment banking was taken out of context, but it still speaks volumes about the BofA mindset before fate threw Merrill into the bank's arms.

Harte believes the bank's brain trust has learned its lesson and the investment bank will likely continue its strength, whoever the next CEO turns out to be.

But a report in

The Wall Street Journal

indicates global banking and markets president Tom Montag was totally out of the loop about Lewis's decision to resign. That suggests the longstanding communication gap between BofA's New York-based traders and investment bankers and their Charlotte-based bosses remains in place.

I am not sure which of the potential CEO candidates is most likely to clash with the investment bank. My nomination would be BofA Home Loans boss Barbara Desoer, but I confess I know very little about her. Montag is also talked about as a potential CEO, though maybe he would tip the balance too far in the other direction. What is clear, though, is whoever the board chooses, it had better first do a good job of vetting the person with Montag and other senior executives in the investment bank.


Written by Dan Freed in New York