Bank stocks got bombarded in 2011, and few got hit harder than Bank of America. Things got so bad last year that CEO Brian Moynihan was even forced to raid the fridge and unload the bank's stake in Pizza Hut. Mama Mia Moynihan! Will Merrill Lynch be next?
10. Moynihan Gets Byrned -- published Nov. 11, 2011
Remember the Talking Heads video for
Once in a Lifetime
? The one where lead singer David Byrne bemoans his mid-life crisis by repeatedly smacking himself in the head while asking "How did I get here?"
Well, as the days go by, and
Bank of America
(BAC - Get Report)
unloads each additional non-core asset from its bloated portfolio, it becomes progressively easier for us to imagine CEO Brian Moynihan behind closed doors flagellating himself in pretty much the same way.
The Charlotte, N.C.-based banking behemoth revealed Monday its plans to sell its stake in Pizza Hut franchisee NPC International to private equity firm Olympus Partners for $755 million, according to a filing with the
Securities and Exchange Commission
The largest U.S. bank by assets inherited the network of approximately 1,150 pizza restaurants when it purchased
for $50 billion at the height of the financial crisis just over three years ago. Bank of America shares, down over 50% so far this year, took yet another pie to the face, falling close to 1% Monday even while all three major indexes finished higher.
As to how Mother Merrill got into the pizza business, well, the brokerage giant bought NPC for $615 million in 2006 and, believe it or not, actually fared pretty well as a pepperoni purveyor. The company, which owns roughly 20% of all Pizza Hut restaurants in the U.S. and has 28,000 employees in 28 states, actually posted a $3.5 million profit in its most recent quarter ended in September.
As to why Moynihan is selling it, well, let's just say he needs the dough. And he's going to need a lot more of it to boost his capital position if Bank of America gets stuck with more losses on its shaky mortgage portfolio. Also not helping Brian's blighted balance sheet was this Monday's decision by a federal judge to approve a $410 million settlement of a class-action lawsuit that accused Bank ofAmerica of overcharging 13.2 million customers for debit card overdrafts.
In fact, that's why he's not only selling Bank of America's slice of a pizza business, but yet another chunk of the bank's
China Construction Bank
The South China Morning Post
reported Monday that Bank of America officials contacted CCB over the weekend to discuss selling part of its $9.2 billion stake in the Chinese bank.
And if such a transaction sounds eerily familiar, it's because a scant three months ago Bank of America unloaded $8.3 billion worth of CCB shares, which is why this latest scuttlebutt sent CCB shares down 3% in Hong Kong, once again hitting Moynihan squarely in the pocketbook.
Of course, Moynihan would far prefer to divest himself of all the ridiculous businesses that his predecessor Ken Lewis rolled up, whether they be Pizza Huts, subprime lenders or Chinese banks, than dilute his already watered-down share base by selling more stock.
But no, he's doing that too. Bank of America announced last week it would sell up to 400 million shares to retire $3 billion in preferred shares and callable debt, even after saying over and over again that it had no need to issue more equity.
Yep, Moynihan may be an entirely different type of Talking Head, but Bank of America remains just like the song says: "Same as it ever was".