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BofA to Shed $500 Billion in Assets: Bove

Tuesday, 3 Aug 2010 | 11:54 AM ET

Bank of America is in the process of shedding some $500 billion of assets as it looks to streamline operations and comply with new financial regulations, analyst Dick Bove said Tuesday.

The company "has embarked upon a course to rationalize its organization," said Rochdale Securities' Bove, who sees the financial giant making broad-based cuts from its $2.36 trillion in assets. The cuts would represent a 21 percent reduction in assets.

Among other moves, BofA has just put its Balboa Insurance unit for sale, dumped several other institutions it owned, and sold off a package of private equity funds, real estate loans and distressed assets.

"It is unclear where the bank will go next, but there is a great deal that can be sold and the sales are just beginning to gain momentum," Bove wrote in a note to clients.

However, future sales could include Bank of America's credit card business, some of its Merrill Lynch trading platform and the divesting of branches.

Bove also thinks the company will take a hard look at its mortgage business to see what fits in future plans.

"The home mortgage company is not making money and seems unlikely to make any for an indeterminate period of time," he wrote. "It is not unrealistic to assume that at some point the bank may decide to make mortgages through its branches and rid itself of the private contractor part of the business."

Bank of America has underperformed its peers this year but is up 1.45 percent in the past month.

Disclosures:

No disclosure information was available for Bove or his company.

Where BofA's Peers & Rivals Stand:

Citigroup

Morgan Stanley

JPMorgan Chase

Goldman Sachs

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