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September 17, 2008

Bank of America becomes Financial Services Global Giant as it Buys Merrill Lynch

Bank of America

Wall Street Finance

Bank of America Corporation's announcement that it has agreed to acquire Merrill Lynch & Co., Inc. in a $50 billion all-stock transaction, has created a company unrivalled in its breadth of financial services and global reach. While Bank of America is one of the world's largest financial institutions, Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide.

Wall Street Finance

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Bank of America Chairman and Chief Executive Officer Ken Lewis said. "Together, our companies are more valuable because of the synergies in our businesses."

"Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world with the combination of these two firms," said John Thain, chairman and CEO of Merrill Lynch.

Wall Street Finance

The transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals. Under the agreement, three directors of Merrill Lynch will join the Bank of America Board of Directors. By adding Merrill Lynch's more than 16,000 financial advisers, Bank of America would have the largest brokerage in the world with more than 20,000 advisers and $2.5 trillion in client assets.

Wall Street Finance

At the same time, the sale of Merrill Lynch (MER) to Bank of America (BAC) has triggered one of the largest and most historical talent feeding frenzies in recent history.

"We have received a lot of calls from Merrill FAs already," says Darin Manis, CEO of RJ & Makay a national financial recruiting firm. "Once the dust settles Merrill brokers will be waiting to hear what their retention packages will be."

RJ & Makay is a financial recruiting firm that has recruited many dozens of brokers representing billions in assets this year and hopes to capitalize on the turbulent landscape to grab billions more in the fourth quarter.

"Even if the pending announcement of the retention package is competitive there will still be attrition. Historically there is an average pattern of 8%-15% attrition. With Merrill's size that could mean over 2,000 brokers ending up with a Merrill competitor. With the average Merrill FA having about 100 million in assets this is clearly a unique and welcome recruiting opportunity," Manis adds.


"Merrill Lynch and Lehman Brothers are the latest corporate casualties in the financial crisis caused by abusive loans from reckless lenders. Even the former chair of the Mortgage Bankers Association now concedes that brokers, lenders and investors 'forgot about [their] customers' because 'making money and our commission checks were more important.' In short, these loans never should have been made. The failure of Lehman and forced sale of Merrill underscore the need for stronger regulation of the mortgage market to prevent this from recurring, and, if we want to fix the economy, the need to modify the millions of bad loans that created this mess."

- Center for Responsible Lending, Sep 15, 2008. [Center for Responsible Lending, 302 West Main Street, Durham, NC 27701, USA.]


"Lehman Brothers aside, the government's actions toward Bear Stearns, Fannie and Freddie, and now handout requests from Detroit automakers could signal an ominous new trend of meddling in markets. Politicians have been digging taxpayers deeper into the fiscal hole, and we have to take their shovels away before we're all buried for good."

- Pete Sepp, Vice President for Policy & Communications, National Taxpayers Union (NTU), Sep 16, 2008. [National Taxpayers Union, 108 N. Alfred Street, Alexandria, Virginia 22314, USA.]


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Edited & Posted by the Editor | 1:47 AM | Link to this Post

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