My family banks at Bank of America Corp. simply because it bought the bank that bought the bank that bought our bank. Plenty of other people bank there for similar reasons. And over the weekend Bank of America reaped the benefits of an acquisition strategy that made it the kingpin of boring old savings and checking accounts. Merrill Lynch & Co. has a proud history and a huge asset management business, but without a foundation of ultra-sticky retail deposits it faced the prospect of a liquidity crisis amidst the current market turmoil. Hence its emergency
sale to BofA for $50 billion in stock, announced Sunday.
Now we'll get to see how BofA's vaunted acquisition machine tackles its biggest challenge yet -- one that comes close on the heels of the bank's purchase of mortgage firm Countrywide Financial Corp.
BofA went into the Countrywide deal saying a Countrywide exec would lead the combined mortgage operation. But BofA CEO Ken Lewis
switched signals in May, putting one of his own in charge as Countrywide started to look dicier than expected. As a spokesman said at the time, BofA likes to do things its own way.
We'll learn more later Monday about how the integration of Merrill -- a much bigger firm than Countrywide, with a distinct culture and an extremely valuable brand -- is expected to work. But there's clearly a delicate balance to be struck here. On the buyer side, there's a proven model and a promise of $7 billion in cost savings by 2012. On the seller side, there's bound to be some disappointment that a proud firm had to go this route. -
Kenneth Klee
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