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Business

Beleaguered Bank of America CEO to retire

Video by Céline MISSOFFE , Fiona CAMERON

Text by NEWS WIRES

Latest update : 2009-10-01

Kenneth Lewis, the man at the helm of the largest US bank, who saw his establishment hobble to the brink of collapse, has said he will retire by Dec. 31, 2009, according to a statement by the bank.

AFP - Bank of America chief executive Kenneth Lewis, at the center of a polemic over its government-backed deal to buy Merrill Lynch last year, announced plans to retire December 31.

Lewis, who had lost the post of chairman earlier this year at an angry shareholder meeting "notified the board of directors of his decision to retire, effective December 31, 2009," the company said in a statement.

"The board will continue ongoing planning to ensure his successor is selected by that date. Lewis will retire as CEO and as a director."

"Bank of America is well positioned to meet the continuing challenges of the economy and markets," said Lewis, who heads the largest US banking group by assets.

"I am particularly heartened by the results that are emerging from the decisions and initiatives of the difficult past year-and-a-half."

Lewis had provoked shareholder anger by acquiring Merrill Lynch without informing them of the investment bank's massive losses.

Later, news emerged that Lewis had been pressured to complete the purchase of firm Merrill Lynch for fear of a further blow to a fragile financial system.

Lewis told a congressional hearing that he concluded the deal because if Bank of America backed away "the government could or would remove management and the board."

But asked specifically if he were "pressured," Lewis replied: "It's hard to find the exact right word to describe what I just described."

Congress opened the inquiry after documents released by New York state Attorney General Andrew Cuomo indicated that top US Treasury and Federal Reserve officials threatened to push out bank management and board members if the takeover were not completed.

The banking giant also faces litigation over bonuses paid to Merrill executives just before the takeover was completed.

Bank of America had reached a deal with the Securities and Exchange Commission to pay a penalty of 33 million dollars to the authorities "for misleading investors" on 3.6 billion dollars in bonuses.

But a federal judge rejected the plan, saying it penalized the shareholders who were victimized, and failed to shed light on what happened.

Regulators were ordered to bring the case to trial, and said last week that new charges could be filed.

Merrill Lynch's payment of cash bonuses on December 29, just ahead of the finalization of its acquisition by Bank of America on January 1, sparked an outcry in the United States over executive compensation, particularly involving government bailed-out firms.

Bank of America had received 20 billion dollars in federal aid to help it acquire the nearly bankrupt firm.
 

Date created : 2009-10-01

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