Bank of America (BAC) plans to merge its Merrill Lynch subsidiary into the parent company to reduce complexity and costs.
The move could happen as early as the fourth quarter and means Charlotte, North Carolina-based Bank of America assumes all the investment bank's obligations and debt, Merrill Lynch said in an Aug. 2 filing. Dissolving the legal entity also ends Merrill Lynch's need to file separate regulatory disclosures.
Bank of America is simplifying its structure more than four years after Chief Executive Officer Brian T. Moynihan's predecessor bought Merrill Lynch in 2009. Merging the legal entity could help the CEO hit his $8 billion-a-year cost-cutting target and comply with regulators who want to make the biggest banks simpler and easier to resolve in a crisis.
"Less complex structures would increase the success of resolution planning via living wills in the case of potential worst-case financial distress scenarios," David Hendler, an analyst at CreditSights Inc., said today in an e-mail.
Merrill Lynch had about $62 billion in long-term debt as of the second quarter, Hendler said. Jerry Dubrowski, a spokesman for the bank, didn't have an immediate comment on the filing. The bank has said it plans to keep the Merrill Lynch brand, which it uses for its retail brokerage and investment bank.