BofA Downshifts on First Republic Sale

CHARLOTTE, N.C. (TheStreet) -- Despite earlier indications that Bank of America (BAC Quote) was putting First Republic up for sale -- and that eager bidders were chomping at the bit -- the firm may hold onto its prized high-end bank after all.

Pressure heated up on BofA to raise capital in the spring, when the Federal Reserve's stress tests determined the bank would need $33.9 billion in additional funds in case economic conditions worsened considerably. The bank responded by saying it would raise capital through earnings, stock offerings and exchanges, and asset sales.

During a conference call with analysts on April 20, CEO Ken Lewis confirmed widespread reports that First Republic was on the block. He responded to a question about what businesses were being prepped for a sale by saying, "we have got First Republic in the process as we speak."

Bank of America: A History

But since that time, Bank of America has raised more than enough capital to satisfy the Fed's onerous demands, engineering a $13.5 billion stock offering, a $14.7 billion preferred-to-common stock exchange, and at least $8.3 billion in asset sales. Furthermore, government probes into the Merrill Lynch acquisition have cut short Lewis' time at BofA, meaning other deals may have to be put on hold until a new leader is at the helm.

"They've got an awful lot going on," says Dennis Nason, a former banker who now runs an executive-search firm. "Their priorities have changed, and First Republic is an awfully small item on their agenda. They've got other large issues that are in the forefront."