Bank of America-Merrill Lynch
By Lauren Tara LaCapra
Objective: To expand Wall Street presence of Bank of America.
Impact: About a year before BofA announced its plan to acquire Merrill Lynch, CEO Ken Lewis declared that he had already had 'all the fun I can stand in investment banking at the moment.' His off-the-cuff joke now seems eerily prophetic.
Lewis now plans to step down on Dec. 31 -- far before anyone, including Lewis himself -- had planned, and his departure represents the biggest casualty of the Merrill acquisition for BofA. The taxpayer-funded deal has also brought a wave of employee defections as well as unexpected balance-sheet strains, and intense government scrutiny. But those concerns haven't kept stock investors at bay -- since March's low point, BofA stock has outshined many competitors.
Impact: About a year before BofA announced its plan to acquire Merrill Lynch, CEO Ken Lewis declared that he had already had 'all the fun I can stand in investment banking at the moment.' His off-the-cuff joke now seems eerily prophetic.
Lewis now plans to step down on Dec. 31 -- far before anyone, including Lewis himself -- had planned, and his departure represents the biggest casualty of the Merrill acquisition for BofA. The taxpayer-funded deal has also brought a wave of employee defections as well as unexpected balance-sheet strains, and intense government scrutiny. But those concerns haven't kept stock investors at bay -- since March's low point, BofA stock has outshined many competitors.
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Lewis also called Merrill the 'deal of a lifetime' and at least some investors are convinced that it will be so. In the end, BofA did expand its wealth management and investment banking operations, which may prove to be a valuable addition to the firm. But the near-term cost to its reputation, management and profitability has been severe. It's also difficult to assess how much BofA has benefitted from acquiring Merrill, since higher revenues have been offset by big write-downs.
Questions linger over Merrill-related investigations and lawsuits, as well as over who will take the reins from Lewis at year-end. The market seems to be more focused on BofA's earnings potential now that it has whittled down Merrill's riskiest exposure, and has a bigger, broader capital markets business.
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