Bank of America Could Scrap Brokerage Sale: FT


Bank of America is considering scrapping the sale of its equities prime brokerage unit after receiving lukewarm interest from potential bidders, the Financial Times reported on its Web site on Sunday.

Bank of America branch, New York City.
Oliver Quillia for

Citing people close to the situation, the newspaper said no final decision on the prime brokerage unit, which has been up for sale for more than three months, had been made.

Competition for the prime brokerage unit, which is believed to have had revenue of more than $180 million last year, weakened this month after JPMorgan Chase's & Co's cut-price acquisition of Bear Stearns, the FT said.

JPMorgan had been seen as an early front-runner for Bank of America's business but its need for a prime brokerage unit was filled by the purchase of Bear, which has a highly regarded and profitable prime brokerage unit, the report said.

British investment bank Barclays Capital and France's BNP Paribas are believed to retain an interest in Bank of America's business because of its strong presence in the U.S. market, the paper said.

People close to the situation said that the indicative offers tabled by potential bidders had not matched Bank of America's expectations, the paper added.

A Bank of America spokeswoman declined comment.

Prime brokers typically provide trading, lending, cash management and other services to hedge funds.

Bank of America said in January it would eliminate 650 corporate and investment banking jobs and sell its prime brokerage unit, as the second-largest U.S. bank retrenches in the face of difficult credit market conditions.

The bank's decision to sell its equities prime brokerage followed a review announced in October last year, when Chief Executive Kenneth Lewis said: "I've had all of the fun I can stand in investment banking."

At the time, the bank said it would trim operations in structured products such as mortgage and asset-backed securities and collateralized debt obligations, but that the job cuts would not affect its prime brokerage unit.