5 Companies Owned by BAC

By Patricia A. Eldridge 3 years ago

Bank of America Corp. (BAC) is among the largest financial institutions in the world, maintaining roughly $2.4 trillion in assets and a customer base of about 66 million consumers and small businesses. The company serves customers including individual consumers, large corporations, high net worth individuals, and governments. Bank of America is also one of the oldest financial institutions in the U.S., with some parts of the company founded 240 years ago. Today, the company divides its products and services into four segments, including Global Banking, Global Markets, Consumer Banking, and Global Wealth and Investment Management. In 2019, Bank of America reported $91.2 billion in revenue and $27.4 billion in net income. It has a market capitalization of $259.2 billion as of December 26, 2020.

Bank of America’s major acquisitions represent efforts by the company to expand into new areas of banking or to increase its reach within existing businesses. Below, we look in greater detail at 5 of Bank of America’s most important acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes.

Merrill Lynch

  • Type of Business: Financial Services
  • Acquisition Price: $50 billion (all-stock transaction)
  • Date Purchased: January 1, 2009

Bank of America’s acquisition of investment and wealth management firm Merrill Lynch in 2008 is by far the company’s largest. Merrill Lynch was officially founded in 1915 and developed over the next century into one of the largest financial services companies in the country. Bank of America’s purchase of Merrill Lynch made the bank one of the largest wealth management businesses in the world, with about $1.8 trillion in client assets at the time of closing. However, Merrill’s investment in collateralized debt obligations (CDOs) and other complex, high-risk financial products placed the firm in danger of collapse during the 2008 financial crisis, threatening to pull its parent into insolvency. Bank of America was forced to take a number of charges and write-offs related to the deal in the subsequent years. The costs included Bank of America’s settlement of a $2.4 billion class action lawsuit related to the acquisition.

U.S. Trust

  • Type of Business: Private Banking
  • Acquisition Price: $3.3 billion
  • Date Purchased: July 2, 2007

U.S. Trust Corp. was founded in 1853 to provide financial services for personal and corporate funds, with a particular focus on high-net-worth individuals. It catered to America’s richest families and industrialists. When Bank of America purchased the company from Charles Schwab Corp. in 2007, U.S. Trust managed roughly $94 billion in client assets and 21,000 employees. The purchase enabled Bank of America to significantly expand its private banking business by combining U.S. Trust with several companies to create a larger business with $427 billion in total client assets. In the process of acquiring U.S. Trust, Bank of America dissolved the earlier brand and rebranded the business as U.S. Trust Bank of America Private Wealth Management. This division is now known as Bank of America Private Bank.

Countrywide Financial

  • Type of Business: Mortgage Services
  • Acquisition Price: Approximately $4 billion (all-stock transaction)
  • Date Purchased: July 1, 2008

Countrywide Financial was founded in 1969 and eventually grew into the largest originator of home mortgages in the U.S. Though Countrywide’s financial health deteriorated drastically during the 2008 financial crisis, Bank of America viewed the acquisition as a way to dramatically increase its position in the home mortgage market. However, the deal significantly boosted Bank of America’s exposure to mortgage lending just as the U.S. housing market was collapsing. Thus, Countrywide became one of Bank of America’s (and the financial services world’s) worst acquisitions. Ultimately, the acquisition cost Bank of America more than $34 billion in consumer real-estate losses and money set aside for payments to investors, as well as $16.7 billion in a fraud settlement related to Countrywide and Merrill Lynch. 

FleetBoston Financial

  • Type of Business: Financial Services
  • Acquisition Price: Approximately $45.5 billion
  • Date Purchased: April 1, 2004

FleetBoston Financial was created in 1999 by the merger of BankBoston and Fleet Financial Group. The company was based in New England and focused primarily on providing banking services for customers in the Northeast. With the purchase of FleetBoston, Bank of America became in 2004 the second-largest banking company in the U.S. with 33 million customers and 2.5 million business clients located in dozens of nations globally. As part of the acquisition, all Fleet branches eventually rebranded as Bank of America locations.

LaSalle Bank

  • Type of Business: Financial Services
  • Acquisition Price: $21 billion
  • Date Purchased: October 1, 2007

Bank of America purchased ABN AMRO North America Holding Company, the parent company of LaSalle Bank, from ABN AMRO Holding NV in late 2007. At the time of the acquisition, LaSalle had a substantial presence in both consumer and commercial banking in the U.S. Midwest and particularly around Chicago and Detroit. Bank of America’s purchase of LaSalle helped to significantly increase its presence in the region, adding 1.4 million retail customers, more than 400 banking centers, 264 offices and thousands of ATMs in the Chicago area, Michigan, and Indiana.

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