Bank of America break up idea piques interest of some
The idea that big bank breakups will unlock shareholders value has come back into vogue, which means there's going to be lot of speculation about the big banks.
One idea that will make a comeback concerns Bank of America Merrill Lynch. There have been calls for the bank to spin off this unit over the past year, and those are likely to increase. Bloomberg Businessweek notes that the Charlotte-based megabank is nearing an agreement to sell Merrill's non-U.S. wealth management business to Swiss company Julius Baer.
"Could this trumpet the beginning of the end of BofA Merrill? When it signed on the dotted line to buy Merrill, BofA was trading at $27 and then rallied to nearly $40 within a month of the announcement. Today the shares are at less than $8. It took no time for then-BofA Chief Executive Officer Ken Lewis to publicly regret the mega-merger, claiming the feds pressured him to consummate despite Merrill's deteriorating financials."
Lewis's predecessor Brian Moynihan has been a bit more circumspect, and has yet to throw in the towel on the merger. But it's tempting to think that he might change his tune at some point.
"If he's now amenable to selling off such a chunk of Merrill Lynch (the non-U.S. operations), how much of a stretch would it be to suggest he could be persuaded sell off or spin off the rest?"
Bank of America has certainly studied the concept--and rejected it. It will take a lot for management to be convinced, testing shareholders' patience.
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