Will Bank of America Sell Merrill Lynch?

Posted by adaniels in Blog on August 2, 2011

Bank of America may need to consider selling Merrill Lynch.

According to an article by John Carney at cnbc.com, “The bank recently disclosed that expenses related to soured home loans could total $20.4 billion in the second quarter.  The bank has racked up legal and settlement costs to resolve demands that it buy back soured mortgages sold into securitizations, many of which were originally made by Countrywide Financial, which the bank acquired in 2008.”

Bank of America is considering selling off some assets, including its brokerage Merrill Lynch.  The bank is also considering spinning Merrill off as a separate company.  No specific deal is on the table, yet insiders think that Bank of America will have difficulty finding a buyer to purchase Merrill Lynch at an acceptable price. 

Bank of America’s dividend is at the financial crisis level of one cent per share.  Bank of America’s stock is down 27 percent for the year.  At this time, regulators will not allow Bank of America to boost its dividend until its capital position improves.

Something needs to be done to repair Bank of America’s shares.  Could selling Merrill Lynch work?

Read full article here

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