BofA Won't Sweat Merrill Departures

Recent acquisitions, however, have been more of a departure from that formula, as BofA has bumped up against government rules that prohibit any one bank from owning more than 10% of the nation's deposits. As a result, it has had to branch out into new lines of business.

Fanger deems the 2006 acquisition of credit card company MBNA a success, in part because former MBNA president Bruce Hammond stuck around to run the credit card operations for BofA. Fanger believes Hammond's recent retirement was legitimately for personal reasons, not because of an internal clash with executives at the acquiring institution.

But the Merrill acquisition presents a special challenge, Fanger argues, because personal relationships between investment banking executives or financial advisers and their clients are far more important than is the case in branch banking. However, he believes BofA is aware of this, and has already negotiated retention packages with several of Merrill's top financial advisers. Those deals help to limit the potential damage from the departure of McCann, who oversaw that business, Fanger says.

However, Fanger sees a bad precedent for the Merrill deal in NationsBank's acquisition of Montgomery Securities in 1997. "Although they did have employee lockups for a period of time, over the couple of years following the merger there were some pretty significant employee defections."

However, another analyst who would not go on the record because he is not authorized by his employer to do so, says BofA emerged from the deal with a much more powerful investment banking franchise than did Montgomery CEO Tom Weisel, who went on to found investment banking boutique Thomas Weisel Partners (TWPG Quote).