British regulators are pressuring Bank of America’s European investment banking arm to improve the way it manages risks, saying its current practices are “simplistic” and need to be retooled, according to people familiar with the matter and communications reviewed by The Wall Street Journal.

The criticism, from the UK's Prudential Regulation Authority, was included in a letter this year to the Bank of America unit. The letter, written by the PRA's head of supervision for US investment banks, also said the bank's Merrill Lynch International unit needs to be "more comprehensive" in evaluating the risks posed by its top business partners.