Bank of America Corp. has agreed to sell First Republic Bank to a group of investors led by the private-equity firms General Atlantic LLC and Colony Capital for more than $1 billion, according to a person familiar with the situation.

As part of the deal, the bank's top management, including founder and chairman James Herbert 2nd, are expected to stay on board.

General Atlantic and Colony are taking about $12 billion of assets belonging to First Republic. Bank of America is retaining about $2 billion of assets, including challenged Las Vegas commercial construction loans.

The deal is being done at roughly First Republic's book value, according to a person close to the process.

Bank of America got First Republic in its purchase of Merrill Lynch & Co., which paid $1.8 billion for the private bank in September 2007 as part of a push to bolster its high-end wealth management business. Merrill ran First Republic as a stand-alone unit with its own brand name and management.

The long-expected sale of First Republic is the result of a review of Bank of America assets. The company is trying to bolster its capital ratios and shed units that are no longer strategic fits. Last month it sold its long-term asset management business, Columbia Management, to Ameriprise Financial Inc. for up to $1.2 billion.

Founded in 1985, First Republic stretches from Los Angeles to Boston. It had $10 billion of assets when Merrill bought it.

B of A declined to comment. The equity firms' bid beat out a group that included Carlyle Group, Blackstone Group and TPG, according to a source familiar with the situation.

General Atlantic and Colony both have prior connections to First Republic. General Atlantic was an early investor in the bank and had a board seat in the 1980s, and Thomas Barrack, Colony's chief executive officer, was a director of the bank in this decade.

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