B of A Is Selling Servicing Unit to Bankers Trust

BankAmerica Corp. has agreed to sell its mortgage securities servicing unit to Bankers Trust New York Corp.

The unit acts as trustee and administrator for $24 billion of mortgage- backed securities. Terms were not disclosed, but analysts estimated the price was between $40 million and $50 million.

The purchase, which is expected to close early next year, is the latest in a round of consolidations of back-office trustee services that began last year. Most recently, Mellon Bank Corp. and Bank of New York Co. agreed to buy corporate trust units from CoreStates Financial Corp.

Trustees handle tasks such as mailing dividend checks, and also make sure transfers are correctly made when the securities are sold.

Bankers Trust already serves as trustee for $68 billion of mortgage securities, making it the leader in this field. The latest transaction will give it $92 billion of assets, almost 10% of the $1 trillion market for mortgage-backed securities.

The bank is adding "profitable volume," because it has already covered costs through existing servicing, said Lauren Koppel, a financial analyst with Argus Research, New York.

The move also signals that BankAmerica, instead of serving as a behind- the-scenes trustee, prefers "to continue emphasizing originating and servicing mortgages," said Raphael Soifer, an analyst with Brown Brothers Harriman & Co.

Bank of America was the largest bank originator of residential mortgages last year, with more than $9.8 billion, and the largest servicer among banks, with more than $65 billion.

The San Francisco bank, which recently named a new chief executive, "is in a position of consolidating its own operations and emphasizing" chosen areas, Mr. Soifer said.

He believes the bank is most interested in retail businesses such as mortgages, and corporate and investment banking.

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