Bank of America Corp.
From MarketsWiki
| Bank of America | |
| |
| Founded | 1928 |
|---|---|
| Headquarters | Charlotte, NC |
| Key People | Chairman, President and CEO Kenneth D. Lewis, |
| Web site | http://www.bankofamerica.com |
Bank of America Corp. (BofA) is one of the largest commercial banks in the United States by deposits and market capitalization. It suffered from the collapse of the U.S. sub-prime mortgage market but it has also become a financial leader on climate change and related environmental issues.
In September of 2008, BofA agreed to acquire Merrill Lynch in a $50 billion deal that would create a global financial-services company. Under terms of the transaction, BofA would exchange 0.8595 shares of its common stock for each Merrill Lynch common share.[1]BofA, along with a handful of other financial institutions, abandoned takeover talks with Lehman Brothers, putting the last nail in Lehman's coffin and forcing Lehman Brothers to declare bankruptcy.[2]
In October of 2008, BofA said it was ready to spend up to $8.4 billion to restructure the troubled mortgage loan portfolio of the mortgage lender Countrywide which it had recently acquired. The bank said in a statement the program was designed to help borrowers who financed their homes with high-risk subprime loans serviced by Countrywide.[3]
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Contents |
Background
BofA has evolved through aggressive acquisition over the past decade to become a dominant financial powerhouse in the U.S. and abroad. BofA is the U.S.'s biggest retail bank by branches, with over 6,100 locations in 30 states following buy-ups closed in 2007.[4]
BofA first became the country's largest bank by customers and accounts in 2003 when it paid $48 billion for FleetBoston Financial.[5] It became the largest credit card issuer after snapping up MBNA for $35 billion in 2005. And although BofA still trails Citigroup in assets, it overtook its rival in market capitalization for the first time ever after Citigroup announced a massive earnings write down late last year.[6]
2007 Performance
BofA took a major financial hit in 2007 through its $2 billion investment in Countrywide Financial, America's largest mortgage company that was also heavily exposed to the slumping sub-prime mortgage market. According to its 2007 annual report, [7] BofA's revenue declined almost 8 percent to $68.1 billion from $73.8 billion one year prior. And although assets rose over that period from $1.46 trillion to $1.72 trillion due to acquisitions, BofA's return on equity (ROE) plummeted more than 30 percent from 16.27 percent in 2006 to just 11.08 percent in 2007.
Environmental Highlights
Although a forgettable year for its shareholders, 2007 was nonetheless something of a green-letter year for BofA's growing environmental status. BofA first broke through as the U.S. financial-industry leader in reducing greenhouse gas (GHG) emissions in 2004.[8] Then the bank announced it worked with the Rainforest Action Network (RAN) to both reduce its own GHG output and tighten investments in projects that destroy unique environments. BofA joined the Pew Center Environmental Leadership Council in late 2006.[9]
The bank announced in March 2007[10] that it would finance $20 billion in "environmentally-sustainable business activity" over the next 10 years. BofA will commit $18 billion to help customers finance new green technology and the remainder to cutting its own corporate GHG emissions.
Bank of America also announced in mid-2007 that it would invest $25 million in British company Climate Exchange, which operates several global trading platforms for climate-based instruments like carbon offsets. It also agreed to purchase 500,000 tons of carbon-emission permits from the Chicago Climate Exchange over three years. But BofA backed out of both those two deals in early 2008, saying it did not need the partnership to achieve its aims.[11]
Latest News
BofA recently put more pressure on the U.S. environmental marketplace by adopting lending guidelines called the Carbon Principles, aimed at encouraging utilities to explore financing alternatives to coal-fired power.[12] The principles were devised earlier this year by J.P. Morgan Chase, Citigroup and Morgan Stanley and are expected to increase the use natural gas as a coal alternative for power generation.[13]
References
- ↑ Bank of America agrees to buy Merrill Lynch. Phoenix Business Journal. Retrieved on September 15, 2008.
- ↑ Lehman Files Biggest Bankruptcy Case as Suitors Balk. Bloomberg. Retrieved on September 15, 2008.
- ↑ Bank Of America Says To Spend Up To $8.4 Bln On Countrywide. AFB. Retrieved on October 6, 2008.
- ↑ Bank of America. Hoovers.com. Retrieved on April 15, 2008.
- ↑ Bank of America Corp.. New York Times. Retrieved on April 15, 2008.
- ↑ BofA tops Citigroup in market capitalization. Charlotte Business Journal. Retrieved on April 15, 2008..
- ↑ 2007 Annual Report. Bank of America. Retrieved on April 15, 2008.
- ↑ New Bank of America Policy Sets Best Practice on Climate Change in US Bank Sector. SocialFunds.com. Retrieved on April 15, 2008.
- ↑ Bank of America Joins Pew Center's Business Environmental Leadership Council. Pew Center. Retrieved on April 15, 2008.
- ↑ Bank Of America Joins Pew Center’s Business Environmental Leadership Council. Bank of America. Retrieved on April 15, 2008.
- ↑ Bank of America pulls out of Climate Exchange deal. Reuters. Retrieved on April 15, 2008.
- ↑ Bank of America to Announce Adoption of The Carbon Principles at Natural Resources Defense Council's Tenth Annual Award Event. Bank of America. Retrieved on April 15, 2008.
- ↑ Bank of America: More Heat on Coal. WSJBlog. Retrieved on April 15, 2008.
