Updates share price throughout.
Bank of America
continues to deal with the headaches associated with the federal government's hefty investment in the company, a day after several rivals moved toward independence.
BofA on Thursday morning was met with reports that it is doling out millions in bonuses to retain top talent, and that it is in talks to sell a lucrative asset to a private-equity group. Executive compensation has been in the crosshairs of lawmakers and the public for companies like BofA, which has received some $45 billion in federal assistance and is shoring up its capital base in response to a government stress test.
Such scrutiny on Wednesday moved 10 competitors including
repay government investments made through the Troubled Asset Relief Program.
BofA shares closed up 4.9% at $12.90.
Charlotte, N.C.-based BofA has come under fire for a bonus scandal at
, which it acquired at the start of the year. A spokeswoman effectively confirmed to the
New York Post
on Thursday that BofA continues to offer big pay packages, in response to a critical story about the topic.
"Competitive recruiting in investment banking and capital markets continues to be very intense and we're taking the steps necessary to retain key talent in response to competitive pressures," spokeswoman Jessica Oppenheim told the
The story pointed out that one well-regarded banker at Merrill was being offered $5 million to stay on board, though Oppenheim labeled all the pay figures cited "inaccurate."
Chairman Ben Bernanke is expected to testify before a congressional panel later this month about the Merrill deal, which has become an albatross of sorts for the firm and its leadership. Besides the hot-button bonus issue, lawmakers are trying to determine whether Bernanke and Treasury Secretary Henry Paulson pressured BofA CEO Ken Lewis to seal the deal and mask escalating losses from shareholders and the public.
reports that BofA is getting closer to selling off First Republic Bank, a private-wealth bank that services upper-crust clients. BofA has listed it as one of the assets it plans to part with in order to shore up capital levels and streamline its operations, which has some overlap due to the Merrill acquisition.
says Gerry Ford, a private-equity investor, is examining a potential purchase of First Republic. The paper reports that Ford is leading a group of private equity firms including Blackstone, Carlyle, Oakhill Capital Partners and TPG, as potential partners with his own investment vehicle, Flexpoint Ford Partners.
Ford is the former CEO of Golden State Bancorp, which was acquired by
several years ago.
BofA has received more support than any competitor other than Citi and
American International Group
. Regulators determined that BofA needed to raise nearly $34 billion in fresh funds to withstand a severe economic downturn, which the bank is in the process of doing.
BofA has tapped the market for cash and said it expects to exceed the mandated amount, but each time it takes a step forward, it seems to take another back -- whether through harsh questioning by lawmakers, or a report on Tuesday that its Countrywide business was accepting another $3.3 billion from the Treasury Department to work out mortgages for troubled homeowners.
As a result, BofA, Citi,
and other companies that were directed to raise money by the government face a longer road to recovery than their peers that have begun to move toward independence.
Shareholders frustrated by the turmoil, dilution and flagging share price stripped Lewis of his chairman title in April. Several board members have since been replaced.