(BAC) Bank of America Looks to Sell Assets Again

On Tuesday, Reuters reported that Bank of America Corporation (BAC) is again preparing to divest its international units in a bid to further streamline its operations and focus on its core businesses. This time, BofA intends to sell its international wealth management units in anticipation of receiving about $3 billion.

The units on sale, which were mostly obtained by BofA from its Merrill Lynch acquisition in 2009, comprise nearly $90 billion worth of assets under management. However, this division of BofA has been procuring mediocre results due to inadequate business scale.

The Prospective Buyers

The potential bidders have been asked to present their tenders this week for the first round of bidding. However, the sale offer may not seem attractive to many buyers as the wealth management businesses normally do not contribute in equity capital.

On the other hand, the eventual buyer will be rewarded with BofA’s goodwill attached with the business on sale. Companies such as UBS AG (UBS), Credit Suisse Group (CS), Deutsche Bank AG (DB), JPMorgan Chase & Co. (JPM) and Wells Fargo & Company (WFC) are expected to be the possible bidders.

Past Divestitures

In March, BofA entered into an agreement to sell its consumer credit card operations in Ireland to Apollo Global Management LLC’s (APO) fund affiliate, Apollo European Principal Finance Fund I (Apollo EPF). The deal is still subjected to regulatory approvals.  BofA’s Spanish consumer credit card operations were also sold to Apollo in August 2011.

Moreover, in 2011, BofA divested its Canadian credit card portfolio as well as certain other assets and liabilities to Toronto Dominion Bank (TD). Furthermore, the company has plans to sell its card business in the U.K.


BofA has been actively participating in divestiture of its international units since last two years. The company has been doing so in order to recover from its sour acquisition of Countrywide Financial in 2008, which resulted in losses and lawsuits, and to further enhance its capital level.

BofA is mainly concentrating on its core business by narrowing down its global business at large to match with the much faster resurgence pace of its peers.

Having cleared the stress test authenticated BofA’s strong capital position and its ability to successfully overcome another severe economic downturn. Though BofA has been battling with a swelling cost structure and a stressed run-off portfolio, the company’s repeated attempts to improve its balance sheet and capital ratios, in spite of passing the stress test, is commendable.

Currently, BofA retains its Zacks #3 Rank, which translates into a short-term Hold rating. Also, considering the fundamentals, we maintain our long-term Neutral recommendation on the stock.

APOLLO GLOBAL-A (APO): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

CREDIT SUISSE (CS): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

TORONTO DOM BNK (TD): Free Stock Analysis Report

UBS AG (UBS): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

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