Merrill Lynch to dissolve into BofA

Bank of America is to merge Merrill Lynch into its own parent company five years after agreeing to purchase the investment bank during the depths of the financial crisis.

The merger could come as early as the fourth quarter and BofA will take on all of Merrill's bank obligations and debt, according to a recent regulatory filing. The move is aimed at streamlining BofA's corporate structure and reducing costs, it said.

While the shake-up in Merrill's legal entity marks a technical end to one chapter in its long history, it is not expected to alter its day-to-day business.

Merrill Lynch, whose vast network of stock brokers became known as the "thundering herd," will keep its brand and continue operating as normal, a spokesman said.

"This will have no impact on how we serve our customers and clients, and it will have no impact on the Merrill Lynch-branded businesses," said Jerry Dubrowski, a spokesman for Charlotte, North Carolina-based BofA.

Under chief executive Brian Moynihan, BofA has been attempting to shed expenses through cost-cutting programmes such as "Project New BAC." Merging Merrill with BofA could help the bank avoid some legal and regulatory expenses, including having to file separate reports with the US securities regulator.

"As part of Bank of America's efforts to streamline its organisational structure and reduce complexity and costs, it has reduced and intends to continue to reduce the number of its subsidiaries, including through intercompany mergers," the filing said.

David Hendler, bank analyst at CreditSights, said the combination of the two corporate entities might also be in response to new banking industry regulation.

"We sense that bank regulators are actively encouraging the big banks to substantially reduce the number of legal and operating entities," Mr Hendler, told his clients. He noted that regulators may want banks to be better prepared for fast resolution under the new "orderly liquidation authority" created to oversee bank failures.

"The company noted that it had done a good deal of back-office preparation to merge different entities and systems, and was finally at a point where it could consider whether it needed a separate intermediate holding company such as Merrill Lynch & Co Inc.," he said.

BofA agreed to buy Merrill Lynch in late 2008, after trading losses and the failure of Lehman Brothers led investors to worry about the investment bank's fate.

Ακολουθήστε το Euro2day.gr στο Google News!Παρακολουθήστε τις εξελίξεις με την υπογραφη εγκυρότητας του Euro2day.gr

FOLLOW USΑκολουθήστε τη σελίδα του Euro2day.gr στο Linkedin

© The Financial Times Limited 2013. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation