HISTORY OF BANK OF AMERICA

Bank of America

Bank of America Corporation

Type
Public (NYSE: BAC TYO: 8648)
Founded
(as "Bank of Italy")
San Francisco, California (1928)
(acquiring banks)
Charlotte, North Carolina (NationsBank) (1874)Boston, Massachusetts (FleetBoston) (1784)
Headquarters
Charlotte, North Carolina, United States
Key people
Kenneth D. Lewis, Chairman/CEOJ. Steele Alphin, CAOJoe L. Price, CFOAmy Woods Brinkley, Chief Risk Officer
Industry
Banking
Products
Financial services
Revenue
▲ $119.19 billion (2007)[1]
Net income
▲ $14.98 billion (2007)[1]
Total assets
$1.72 trillion (2007)[1]
Employees
210,000 (2007)[2]
Website
http://www.bankofamerica.com/ http://www.bofa.com/
Bank of America (NYSE: BAC TYO: 8648) is the largest commercial bank in the United States by deposits and market capitalization.[3][4]
It is a member of Federal Deposit Insurance Corporation (FDIC).
Contents[hide]
1 Corporate history
1.1 Bank of Italy
1.2 Growth in California
1.3 Expansion outside of California
1.4 Merger of NationsBank and BankAmerica
1.5 History since 1998
1.5.1 Acquisition of National Processing Company
1.5.2 FleetBoston Financial merger
1.5.3 Purchase of MBNA
1.5.4 Divestiture of operations in Brazil, Chile and Uruguay
1.5.5 Purchase of US Trust
1.5.6 Acquisition of ABN AMRO North America and LaSalle Bank
1.5.7 Acquisition of Countrywide Financial
1.5.8 Acquisition of Merrill Lynch
2 Bank of America divisions
2.1 Consumer
2.2 Corporate
2.3 Investment management
2.4 International operations
3 Corporate governance
3.1 Directors
4 Social responsibility
4.1 Diversity and inclusion
4.2 Environmental record
4.3 Student Leader
5 Controversies
6 Bank of America corporate buildings
7 Major sponsorships
7.1 Sports
7.2 Corporate sponsorships
7.3 Regional sponsorships:
7.3.1 Arts and culture
7.3.2 Baseball
7.3.3 Basketball
7.3.4 American Football
7.3.5 Soccer
7.3.6 NASCAR, International Speedway Corp. (ISC) and Speedway Motorsports, Inc. (SMI)
7.3.7 Golf
8 See also
9 References
10 Further reading
11 External links
//

[edit] Corporate history
Before 1998, the Bank of America organization that exists today was known as NationsBank and was previously known in earlier years as North Carolina National Bank before being abbreviated to "NCNB" as it branched out of its home base of Charlotte, North Carolina. In 1998, NationsBank acquired San Francisco-based BankAmerica and renamed the corporation "Bank of America".

[edit] Bank of Italy
Many historical banks across the United States have been consolidated into the Bank of America. The most prominent is the Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904 based on catering to immigrants. Amedeo was raised by the Fava/Stanghellini family when his father was shot while trying to collect on a $10.00 debt. When the 1906 San Francisco earthquake struck, Giannini was able to get all of the deposits out of the bank building and away from the fires.
In the late 1920s, Giannini approached Orra E. Monnette, President and founder of Bank of America, Los Angeles, about a merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced branch banking system. The merger was completed in early 1929 and took the name Bank America. The combined company was headed by Giannini with Monnette serving as co-Chair.

[edit] Growth in California
Giannini sought to build a national bank, expanding into most of the western states as well as into the insurance industry, under the aegis of his holding company, Transamerica Corporation. The passage of the Bank Holding Company Act of 1956, prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America and Transamerica were separated, with the latter company continuing in the insurance business. However, federal banking regulators prohibited Bank of America's interstate banking activity, and Bank of America's domestic banks outside California were forced into a separate company that eventually became First Interstate Bancorp, which was acquired by Wells Fargo and Company in 1996. It was not until the 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside California.
These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank introduced the BankAmericard, which changed its name to VISA in 1975.[5] A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.

[edit] Expansion outside of California

Bank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.
Following the passage of the Bank Holding Company Act of 1967, BankAmerica Corporation was established for the purpose of owning Bank of America and its subsidiaries.
BankAmerica expanded outside California in 1983 with its acquisition of Seafirst Corporation of Seattle, Washington, and its wholly owned banking subsidiary, Seattle-First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the oil industry. BankAmerica continued to operate its new subsidiary as Seafirst rather than Bank of America until the 1998 merger with NationsBank.
BankAmerica was dealt huge losses in 1986 and 1987 by the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost. Though Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, Clausen was appointed to replace Armacost. The losses resulted in a huge decline of BankAmerica stock, making it vulnerable to a hostile takeover. First Interstate Bancorp of Los Angeles (which had originated from banks once owned by BankAmerica), launched such a bid in the fall of 1986, although BankAmerica rebuffed it, mostly by selling its FinanceAmerica subsidiary to Chrysler, and by selling the brokerage firm Charles Schwab and Co. back to Mr. Schwab. By the time of the 1987 stock market crash, BankAmerica's share price had fallen to $8, but by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade.
BankAmerica's next big acquisition came in 1992. The company acquired its California rival, Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon and Washington (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the largest bank acquisition in history. Federal regulators, however, forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, as the combination of Seafirst and Rainier would have given BankAmerica too large a share of the market in that state. Later that year, BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada.
In 1994, BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago, which had become federally owned as part of the same oil industry debacle emanating from Oklahoma City's Penn Square Bank, that had brought down numerous financial institutions including Seafirst. At the time, no bank had the resources to bail out Continental, so the federal government operated the bank for nearly a decade. Illinois at that time regulated branch banking extremely heavily, so Bank of America Illinois was a single-unit bank until the 21st century. BankAmerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.
These mergers helped BankAmerica Corporation to once again become the largest U.S. bank holding company in terms of deposits, but the company fell to second place in 1997 behind fast-growing NationsBank Corporation, and to third in 1998 behind North Carolina's First Union Corp. In 1998, BankAmerica was purchased by North Carolina-based NationsBank, and changed the headquarters to Charlotte, North Carolina.

[edit] Merger of NationsBank and BankAmerica

Bank of America Corporate Center building in the background, the tallest skyscraper between Philadelphia and Atlanta.
In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4bn so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after the 1998 Russia bond default. BankAmerica was acquired by NationsBank later that year.
The purchase of BankAmerica Corp. by the NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation, and Bank of America NT&SA, changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044 which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica.
Following the US$64.8 billion acquisition of BankAmerica by NationsBank, the resulting Bank of America had combined assets of US$570 billion, as well as 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined company will have a larger than 25 percent FDIC deposit market share in a particular state or 10 percent deposit market share overall.

[edit] History since 1998
In 2001, Bank of America CEO and chairman Hugh McColl stepped down and named Ken Lewis as his successor. Lewis's greater focus on financial discipline and efficiency contrasted greatly with the expansionary mergers and acquisition strategy of his predecessor.

[edit] Acquisition of National Processing Company
In 2004, Bank of America purchased Louisville, Kentucky-based National Processing Company for $1.4 billion from National City Corp. The company was renamed BA Merchant Services. The company provides financial solutions for travel and healthcare companies. BA Merchant Services is headquartered in Louisville, with a call center in El Paso, Texas.

[edit] FleetBoston Financial merger
Also in 2004, Bank of America acquired Boston, Massachusetts-based FleetBoston Financial for $47 billion in an all-stock deal to solidify Bank of America's position as the bank with the largest FDIC-rated deposit market share in the United States with $513 billion in deposits, well ahead of the number two bank holding company, newly-merged JPMorgan Chase-Bank One with $353 billion in deposits and number three Wells Fargo & Co. with $228 billion (as of 30 June 2003). This acquisition gave Bank of America access to the northeastern market.

Bank of America branch location in Lowell, MA; formerly a FleetBoston location.

[edit] Purchase of MBNA
On 30 June 2005, Bank of America announced it would purchase credit card giant MBNA for $35 billion in cash and stock. The Federal Reserve Board gave final approval to the merger on 15 December 2005, and the merger closed on 1 January 2006. The acquisition of MBNA provided Bank of America a leading credit card issuer at home and abroad. The combined Bank of America Card Services organization, including the former MBNA—had more than 40 million U.S. accounts and nearly $140 billion in outstanding balances.

[edit] Divestiture of operations in Brazil, Chile and Uruguay
In May 2006, Bank of America and Banco Itaú (Investimentos Ita S.A.) entered into an acquisition agreement through which Itaú agreed to acquire BankBoston's operations in Brazil and was granted an exclusive right to purchase Bank of America's operations in Chile and Uruguay. A deal was signed in August 2006 under which Itaú agreed to purchase Bank of America's operations in Chile and Uruguay. Prior to the transaction, BankBoston's Brazilian operations included asset management, private banking, a credit card portfolio, and small, middle-market, and large corporate segments. It had 66 branches and 203,000 clients in Brazil. BankBoston in Chile had 44 branches and 58,000 clients and in Uruguay it had 15 branches. In addition, there was a credit card company, OCA, in Uruguay, which had 23 branches. BankBoston N.A. in Uruguay, together with OCA, jointly served 372,000 clients. While the BankBoston name and trademarks were not part of the transaction, as part of the sale agreement, they cannot be used by Bank of America in Brazil, Chile or Uruguay following the transactions. Hence, the BankBoston name has disappeared from Brazil, Chile and Uruguay. The Itaú stock received by Bank of America in the transactions has allowed Bank of America's stake in Itaú to reach 11.51%. Banco Boston do Brazil had been founded in 1947.

[edit] Purchase of US Trust
On 20 November 2006, Bank of America announced the purchase of The United States Trust Company for $3.3 billion, from the Charles Schwab Corporation. US Trust had about $100 billion of Assets Under Management and over 150 years of experience. The deal closed 1 July 2007.[6]

[edit] Acquisition of ABN AMRO North America and LaSalle Bank
On September 14, 2007, Bank of America won approval from the Federal Reserve to acquire ABN AMRO North America, LaSalle Bank Corporation and LaSalle Corporate Finance from ABN AMRO for $21 billion. With this combination Bank of America will have 1.7 trillion in assets. A Dutch court blocked the sale until it was later approved in July. The acquisition was completed on October 1, 2007.
The deal increased Bank of America's presence in Illinois, Michigan, and Indiana by 411 branches, 17,000 commercial bank clients, 1.4 million retail customers and 1,500 ATMs. Bank of America has become the largest bank in the Chicago market with 197 offices and 14% of the deposit share, passing up JPMorgan Chase.
LaSalle Bank and LaSalle Bank Midwest branches adopted the Bank of America name on 5 May 2008.[7]

[edit] Acquisition of Countrywide Financial
On August 23, 2007 the company announced a $2 billion repurchase agreement for Countrywide Financial. This purchase of preferred stock was arranged to provide a return on investment of 7.25% per annum and provided the option to purchase common stock at a price of $18 per share.[8]
Following that initial investment, on January 11, 2008, Bank of America announced that they would buy Countrywide Financial for $4.1 billion.[9] This acquisition, which closed on July 1, 2008, gave the bank a substantial market share of the mortgage business, and access to Countrywide's expertise, technology, and employees for servicing mortgages.[10] The acquisition was seen as preventing the potential of bankruptcy for Countrywide. Countrywide denied that it was close to bankruptcy. Countrywide provides mortgage servicing for nine million mortgages valued at $1.4 trillion USD as of December 31, 2007.[11] However, Countrywide is under FBI investigation due to possible fraud in home loans and mortages, therefore Bank of America states that by 2009 they will be "officially" affiliated to Countrywide.[12]
On July 1, 2008, Bank of America Corporation completed its purchase of Countrywide Financial Corporation, which makes the corporation the nation's leading mortgage originator and servicer controlling between 20 to 25 percent of the home loan market.[13] The deal was structured to merge Countrywide with the Red Oak Merger Corporation, which Bank of America created as an independent subsidiary. It has been speculated that the deal was structured this way to prevent a potential bankruptcy stemming from large losses in Countrywide to hurt the parent organization by keeping Countrywide bankruptcy remote.[14]

[edit] Acquisition of Merrill Lynch
The Wall Street Journal reported September 15, 2008, that Merrill Lynch will be sold to Bank of America for about US$50 billion or about $29 per share.[15] This will make Bank of America the largest financial services company in the world. [16]

[edit] Bank of America divisions

Bank of America ATM

Typical Bank of America local office
Bank of America generates 90% of its revenues in its domestic market and continues to buy businesses in the US. The core of Bank of America's strategy is to be the number one bank in its domestic market. It has achieved this through key acquisitions.[17]

[edit] Consumer
Global Consumer and Small Business Banking (GC&SBB) is the largest division in the company, and deals primarily with consumer banking and credit card issuance. The acquisition of FleetBoston and MBNA significantly expanded its size and range of services, resulting in about 51% of the company's total revenue in 2005. It competes directly with the retail banking divisions of Citigroup and JPMorgan Chase. The GC&SBB organization includes over 5,700 retail branches and over 17,000 ATMs across the United States.
Bank of America is a member of the Global ATM Alliance, a joint venture of several major international banks that allows customers of the banks to use their ATM card or check card at another bank within the Global ATM Alliance with no fees when traveling internationally. Other participating banks are Barclays (United Kingdom), BNP Paribas (France), China Construction Bank (China), Deutsche Bank (Germany), Santander Serfin (Mexico), Scotiabank (Canada) and Westpac (Australia and New Zealand).[18] This however does not include cash advances or any of their credit card services which when used abroad deduct a 3% transaction fee and a 3% cash advance fee on top of the currency transaction fee. Unfortunately, most USA customers traveling in France will be unable to use their ATM cards at BNP Paribas kiosks because they only accept ATM cards which contain computer chips (Smart Card).
Bank of America, N.A is a nationally chartered bank, regulated by the Office of the Comptroller of the Currency, Department of the Treasury.

[edit] Corporate
Global Corporate and Investment Banking (GCIB), also known as Banc of America Securities LLC, provides mergers and acquisitions advisory, underwriting, capital markets, as well as sales & trading in fixed income and equities markets. Its strongest groups include Leveraged Finance, Syndicated Loans, and mortgage-backed securities. It also has one of the largest research teams on Wall Street. Banc of America Securities LLC is based in New York City, with major offices also located in Charlotte, Chicago, San Francisco, Tokyo, Frankfurt, London, and Mumbai. Ken Lewis, the ambitious chief executive who masterminded the bank's expansion into exotic new businesses including GCIB, bluntly ruled out any further acquisitions in its investment banking division. "I've had all of the fun I can stand in investment banking at the moment," he told analysts.

[edit] Investment management
Global Wealth and Investment Management manages assets of institutions and individuals. It is among the 10 largest U.S. wealth managers (ranked by private banking assets under management in accounts of $1 million or more as of June 30, 2005). In July 2006, Chairman Ken Lewis announced that GWIM's total assets under management exceeded $500 billion. GWIM has five primary lines of business: Premier Banking & Investments (including Bank of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, Columbia Management Group, and Banc of America Specialist.
Bank of America has recently spent $675 million building its US investment banking business and is looking to become one of the top five investment banks worldwide. "Bank of America already has excellent relationships with the corporate and financial institutions world. Its clients include 98% of the Fortune 500 companies in the US and 79% of the Global Fortune 500. These relationships, as well as a balance sheet that most banks would kill for, are the foundations for a lofty ambition."[19]
Bank of America is currently constructing a massive new headquarters for its New York City operations. The skyscaper will be located on 42nd Street and Avenue of the Americas, at Bryant Park, and will feature state of the art, environmentally-friendly technology throughout its 1.2 million square feet (111,484 m²) of office space. The building will be the headquarters for the company's investment banking division, and will also host most of Bank of America's New York-based staff.

[edit] International operations
In 2005, Bank of America acquired a 9% stake in China Construction Bank, China's second largest bank, for $3 billion.[20] It represented the company's largest foray into China's growing banking sector. Bank of America currently has offices in Hong Kong, Shanghai, and Guangzhou and is looking to greatly expand its Chinese business as a result of this deal.
Bank of America has invested in India as an emerging market. Currently, Bank of America maintains branches in Mumbai, Chennai, Calcutta, New Delhi and Bangalore. For the fiscal year ending March 31, 2006 Bank of America reported an 80% increase in net profit.[21]
Bank of America operated under the name BankBoston in many other Latin American countries, including Brazil. In 2006, Bank of America sold all BankBoston's operations to Brazilian bank Banco Itaú, in exchange for Itaú shares. The BankBoston name and trademarks were not part of the transaction and, as part of the sale agreement, cannot be used by Bank of America. (That meant the extinction of the BankBoston brand.)
Bank of America's Global Corporate and Investment Banking spans the Globe with divisions in United States, Europe and Asia. The U.S. headquarters are located in New York, European headquarters are based in London and Asia's headquarters are split between Singapore & Hong Kong.

BY:-ANAND SHANKAR