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January 2, 2009

Bank of America completes acquisition of Merrill Lynch

by Gill Montia

Story link: Bank of America completes acquisition of Merrill Lynch

Bank of America Corporation (BofA) has completed its purchase of Merrill Lynch, to create the largest wealth management business in the world.

The transaction was hurriedly agreed in mid-September, shortly before Lehman Brothers filed for bankruptcy protection.

Shareholders of Merrill Lynch received .8595 shares of BofA common stock for each common share of Merrill Lynch held.

The merged business holds over $2 trillion in client assets and employs around 20,000 financial advisers.

The move has also strengthened BofA’s capacity in debt and equity underwriting, sales and trading, and merger and acquisition advice.

At the same time it gives BofA a stake of almost 50% in BlackRock Inc, the investment management firm with operations in the US, Europe and Asia Pacific.

The merger should achieve $7 billion in pre-tax expense savings by 2012 through a mixture of job cuts, savings on technology and vendor and marketing expenses.

In December, BofA announced that it would be reducing its headcount by between 30,000 and 35,000 over the next three years, in response to a deteriorating economic environment and the integration of Merrill Lynch.

BofA’s chairman and chief executive, Kenneth Lewis, says the new group is uniquely positioned to win market share and expand its leadership position in markets around the world.


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