Bank of America Corp. Europe

THE SCOOP

Beyond America

Bank of America is one of the world's largest financial institutions, with customers in more than 150 countries.  The company has business relationships with more than 80 per cent of the Global Fortune 500.  And as of the beginning of 2009, it could boast about making one of the most high-profile acquisitions in banking history.

In September 2008, Bank of America made just about every headline in the world, announcing that it would buy New York-based investment bank Merrill Lynch.  On 1 January 2009, the bank acquired Merrill Lynch in exchange for common and preferred stock with a value of US$29.1 billion.  BofA, which called the purchase "a great opportunity for our shareholders," expects to achieve US$7 billion in pre-tax expense savings by 2012.  When the deal closed in early 2009, it made BofA the biggest US bank in terms of assets, with more than US$2 trillion.  It also made the combined firm the largest brokerage firm in the world, with about 16,000 financial advisors; one of the leading investment banking advisory firms, with significant operations in M&A advisory as well as debt and equity underwriting; and one of the world's top wealth management firms, with Merrill Lynch's nearly 50 percent stake in U.S.-based investment management company BlackRock.

In January 2009, not long after the Merrill deal closed, BofA accepted its second round of TARP (Troubled Asset Relief Program) funds from the US government, taking US$20 billion in exchange for preferred stock in the firm.  That brought BofA's total TARP funds to US$45 billion (in October 2008, the US government gave US$15 billion to BofA and US$10 billion to Merrill Lynch under TARP in exchange for preferred shares).

Many of Bank of America's services to corporate and institutional clients are provided through its U.S. and UK subsidiaries such as Banc of America Securities LLC, Banc of America Securities Limited  and Merrill Lynch.

Banc of America Securities LLC (BAS), based in New York City, is the investment banking subsidiary of Bank of America.  BAS's business spans both domestic US and international investment banking markets.  The use of the word Banc tends to confuse some people, but its use bears great significance in that it is indicative of the fact BAS is not a bank, and its deposits and holdings are not insured by the Federal Deposit Insurance Corporation.  In the UK, Banc of America Securities Limited is a subsidiary of Bank of America, N.A., and is authorised and regulated in the United Kingdom by the FSA (Financial Services Authority).  Headquartered in lower Manhattan, Merrill Lynch had two main business segments when it came into the BofA fold: global markets and investment banking (with subunits of sales and trading; fixed income, currencies and commodities; equities; and investment banking), and global wealth management (which included global investment management and global private clients).

Bank of America has offices around the world, with London and Frankfurt being the company's main European locations.  The financial turmoil of 2008 contributed to the termination of "a multitude of industry groups in Europe," according to the firm, as it downsized its international operations .  The company's strongest investment banking groups include leveraged finance and high-yield debt underwriting, in addition to a strong M&A business.

Bank of America's global corporate and investment banking group (GCIB) focuses on companies with annual revenue of more than US$2.5 million. This includes middle-market and large corporations, institutional investors, financial institutions, as well as government entities. GCIB's services include M&A, raising equity and debt capital, lending, trading, risk management, treasury management and research.

Awards galore

Through its equity markets division, Banc of America Securities caters to institutional, corporate and hedge fund clients, assisting them to raise capital, manage exposure, grow and invest funds.  The bank has achieved considerable success in this realm and that has not passed without recognition. Recent awards include: No. 1 Converts US Market/Global Issuers (Bloomberg, December 2008); No. 1 Algorithmic Trading (Alpha, September 2008); No. 1 Listed Options Market Share (a leading independent research provider, 2007); No. 2 Best Broker for Difficult Trades (Bloomberg, October 2008); No. 2 Best at Recommending Risk Management Solutions (Treasury & Risk magazine, 2008); No. 3 Overall Best Provider of Derivatives (Treasury & Risk magazine, 2008); No. 4 Convertibles Market Share (a leading independent research provider, 2007); No. 4 NASDAQ 100 Trade Volume (Bloomberg, full year 2007); No. 5 World's Best Brokers (Bloomberg, October 2008); No. 5 US Initial Public Offerings and Follow On Offerings (Bloomberg, as of December 5, 2008); No. 5 Equity and Equity-linked Issuance (Bloomberg, as of December 5, 2008); No. 6 NYSE Trade Volume (Bloomberg, full year 2007) .

Additionally, the newly combined organization won several awards in 2009 for its work in Europe.  The Banker gave BofA a Europe M&A Deal of the Year award for its work on Electricite de France's acquisition of British Energy, and a Europe Highly Commended Capital Raising Deal award for its work as sole advisor to Banco Santander.  Capital Markets Daily also named BofA the Best Overall Euro Commercial Paper Dealer and Best USD Euro Commercial Paper Dealer.  TABB Group European Equity Trading Report named Bank of America the Most Preferred Broker in Europe, and in the annual Financial Times/StarMine Analyst Awards, the bank's research unit was ranked No. 1 overall worldwide, No. 2 overall in Europe, No. 3 in developed Europe and No. 3 for earnings forecasts.

March 2009: No bonus for Lewis

Bank of America said it did not give a bonus to CEO Ken Lewis or any other of its high-ranking executives in 2008.  Although many of its competitors opted to pay out bonuses, the bank said its most recent financial statement didn't measure up to its hopes.  Though Lewis received a salary of US$1.5 million, his total compensation (including stock-based rewards) dropped 56 per cent from the previous year; according to AP calculations, it fell from US$20.4 million in 2007 to US$9 million in 2008.

March 2009: Commence the probe

Bank of America launched an investigation into how Merrill Lynch accounted for some suspicious trades made by traders in 2008. Among the former Merrill employees involved in the probe is London-based currency trader Alexis Stenfors, who incurred a loss of more than US$120 million. Stenfors' trades set off a warning bell to the bank, which then began to look closely at the activities of other traders, some of whom had lost millions of dollars in other areas such as credit derivatives.

February 2009: Lewis gets subpoenaed

New York State Attorney General Andrew Cuomo subpoenaed Bank of America CEO Kenneth Lewis in a state probe regarding whether BofA held back information from investors prior to its purchase of Merrill Lynch.  According to The Wall Street Journal, in addition to looking for facts about whether investors were deliberately deceived, Cuomo is also investigating if about $4 billion in Merrill bonuses should have been revealed to investors.

February 2009: Who wants to be a millionaire?

New York State Attorney General Andrew Cuomo revealed that 700 of the 39,000 Merrill Lynch employees were paid a bonus of US$1 million or higher in 2008.  In a letter to the House Financial Services Committee, Cuomo said Merrill "chose to make millionaires out of a select group of 700 employees."  Cuomo also condemned Merrill for moving its bonus payments up to December 2008, prior to the firm's merger with Bank of America.

A month later, in March 2009, The Wall Street Journal reported that the annual bonuses may have been higher than Cuomo originally thought.  Eleven of Merrill's high-ranking executives accepted more than US$10 million in cash and stock in 2008, insiders told the paper.  Moreover, an additional 149 employees collected at least US$3 million in 2008.   In total, the bonus payments for the firm's 10 highest-paid workers came to $209 million in cash and stock, up from the US$201 million the firm paid out in the previous year.

January 2009: Two at the top

According to Thomson Reuters, Merrill Lynch and BofA found themselves near the top of many investment league table rankings for 2008 (the firms were ranked separately for the year, since the Merrill acquisition didn't close until 2009).  Among its many top rankings in 2008, Merrill placed No. 5 in global debt, equity and equity-related underwriting, No. 6 in global debt, No. 8 in global mortgage-backed securities, No. 9 in global high-yield debt, No. 7 in U.S. investment grade debt, No 7 in international bonds, No. 3 in global equity and equity-related underwriting, No. 2 in global common stock, No. 5 in global IPOs, No. 4 in US equity and equity-related underwriting, No. 1 in US IPOs, No. 4 in EMEA equity and equity-related deals, No. 4 in EMEA common stock, No. 6 in global announced M&A deal advisory, No. 4 in announced U.S. M&A and No. 8 in announced European M&A.

Banc of America Securities, meanwhile, ranked No. 10 in global debt underwriting, No. 3 in global mortgage-backed securities, No. 4 in global debt, No. 3 in global asset-backed securities, No. 3 in US investment grade debt, No. 2 in global high-yield debt, No. 7 in global equity and equity-related deals, No. 10 in global common stock, No. 5 in US  equity and equity-related underwriting, No. 5 in US IPOs, No. 14 in global announced M&A deals and No. 8 in US announced M&A.



Bank of America Corp. Europe


2 King Edward Street
London EC1A
Phone: +44 20 7174 4000
www.bankofamerica.com

STATS


  • Employer Type: Public
  • Stock Symbol: BAC
  • Stock Exchange: NYSE
  • CEO: Brian T. Moynihan
  • 2010 Employees: 283,000

Major Office Locations

  • London, United Kingdom

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