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Business

FED approves Bank of America takeover of Merrill Lynch

Text by AFP

Latest update : 2008-12-08

The US Federal Reserve has approved the takeover of troubled investment bank Merrill Lynch by the Bank of America. This 50 billion dollar stock acquisition will make BoA the biggest US banking and financial firm.

The Federal Reserve on Wednesday gave formal approval to Bank of America's acquisition of Merrill Lynch, the Wall Street icon battered by the housing and credit crisis.
  
The 50-billion-dollar stock acquisition had been announced in September at the same time rival Lehman Brothers collapsed and fears were rising over the survival of Merrill, the brokerage giant with the bull sculpture outside its Wall Street headquarters.
  
On finalizing the deal, Bank of America would bolster its position as the largest US banking and financial firm with assets of 2.7 trillion dollars.
  
Bank of America, based in Charlotte, North Carolina, would control deposits of some 852 billion dollars, or 11.9 percent of the US total.
  
But the Fed said its review along with that of the Department of Justice concluded that the deal would not harm competition, since the two firms have little overlapping banking activity in major markets and Merrill's main activity is in the brokerage sector.
  
Merrill Lynch was seeking a lifeline with its shares tumbling some 78 percent over the past year on fears of snowballing losses from the subprime real estate meltdown and global credit squeeze.

Date created : 2008-11-26

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