Bank of America is shedding some of its foreign banks and other assets while positioning itself for a "Citigroup-type of breakup," banking analyst Dick Bove said Thursday.
The financial titan is selling two of its Latin America holdings—Bank Itau Unibanco and Grupo Financiero Santander—for a combined $6.9 billion. It also is shedding a private equity portfolio for $2 billion.
Taken together, Bove sees the sales as indicative that BofA is getting ready to trim itself to conform with the government's view that banks should start getting smaller.
"What is relevant about the sale of the Mexican bank and other interests is that these sales represent what is now an ongoing restructuring of this company," Bove, or Rochdale Securities, wrote in a note to clients. "More sales are quite likely of consumer finance-related businesses, asset management positions, and other ventures. The bank may be remaking itself as a capital markets company with far reaching international interests."
Bove points out that President Obama has praised BofA's efforts at streamlining and says the bank likely is doing everything it can "in lining up its strategy with the US government's view of banking."
"It has been selected by the White House as the only bank in America that really understands the new banking environment," Bove says of BofA.
The bank also has sold its Columbia Asset Management Division and First Republic Bank as well as its interest in a Chinese bank.
Bove compared the changes to those enacted by fellow Big Four bank Citigroup , which has been shedding assets as well since the financial crisis and when the government took what was a 27 percent stake in the company.
"[T]he company has embarked on a dramatically different course which is likely to take it out of consumer finance to some extent and increase its presence in the Capital Markets," Bove wrote in a separate note Wednesday on the company. "If true, this would be positive."
BofA shares have outperformed the company's peers since the market correction began on April 23.