M and A
BoA Merrill Lynch May Shed Non-US Wealth Business Empire - Report
Bank of America Merrill Lynch, which became the world’s biggest wealth manager by size when BoA bought Merrill at the start of 2009, is putting its non-US wealth businesses up for sale in a deal that could bring in up to $3 billion, Reuters reports, citing unnamed sources.
The US-listed banking giant declined to comment to this publication when contacted.
If confirmed, the move highlights how a relatively moribund merger and acquisition market for wealth management – with some exceptions – could spark into life as cost pressures continue to bite, Christopher Wheeler, analyst at Italy’s Mediobanca, told this publication in a phone call. He has just published a book on global wealth management, including M&A trends.
A BoA sale of the Merrill business outside the US made sense, said Wheeler. The firm had not been able to reach critical mass in scale outside the domestic US market, he said.
“People are looking to pick up international assets now; there are firms like Deutsche Bank that want to expand and JP Morgan might want to expand also outside the US,” Wheeler said. “Bank of America very much wants to concentrate on its domestic business. I don’t think Merrill [Lynch] ever quite got to where they wanted outside the US,” Wheeler said. (His new book is called Chasing 70 Per Cent of Global GDP.)
The news service said the non-US side of BoA oversees about $90 billion of assets.
The report quoted one of its sources as saying: "There is a lot of soul-searching going on by a lot of US players as to what to do with their non-US private banking operations."
The bank had asked potential suitors to put in first-round bids this week, according to one of the sources quoted by the news service.
BoA Merrill Lynch has been streamlining its business as part of a move to sharpen profitability. In December last year, the firm said it is closing its wealth management business serviced from Brazil. In January this year, it was reported that BoA may slash annual costs by an additional $3 billion in the next stage of chief executive officer Brian Moynihan's expense-cutting plan; this will include wealth management.
