Bank of America Corp. is looking to sell a private bank it inherited from Merrill Lynch & Co. as the bank tries to preserve capital and possibly shed noncore assets, according to people familiar with the situation.
The private bank, First Republic Bank, was purchased by Merrill for $1.8 billion in September 2007 to bolster the securities firm's wealth-management and banking operations. Merrill ran First Republic as a standalone unit with its own brand name and management.
Questions about First Republic's future have swirled ever since Charlotte-based Bank of America agreed in September to buy Merrill. Bank of America already has a wealth-management business, U.S. Trust, which was acquired from Charles Schwab Corp.
Founded in 1985, First Republic stretches from Los Angeles to Boston. At the time of the San Francisco bank's purchase by Merrill, First Republic had $10 billion of deposits.
Possible buyers of First Republic include Goldman Sachs Group Inc. and Morgan Stanley. Those two companies are trying to expand their deposit-gathering businesses as part of their recent conversion to bank-holding companies. Goldman and Morgan Stanley declined to comment.
Bank of America spokesman Robert Stickler said the company "has no certain plans for any of the assets under Merrill Lynch." Bank of America is examining which Merrill holdings are considered noncore and deciding "what to do about that," he said.
According to people close to Bank of America, executives are examining noncore assets and noncore businesses, looking for any that are no longer strategic fits. Mr. Stickler denied that a companywide review is under way, but acknowledged that executives are trying to reduce the size of the company's balance sheet. One possibility is that certain trading assets could be sold.
Asked whether other assets could be sold as Bank of America works to bolster its capital ratios, Mr. Stickler said the company might sell more shares of China Construction Bank, while still remaining a "strategic partner" to CCB. Bank of America isn't considering a sale of its stake in BlackRock Inc., a New York money manager that was partly owned by Merrill.
Bank of America Chairman and Chief Executive Kenneth Lewis has said the company can ride out the financial crisis and doesn't need government aid beyond the $45 billion it already has received.
Separately, Mr. Lewis is expected to give testimony Thursday to investigators for New York Attorney General Andrew Cuomo, as part of Mr. Cuomo's inquiry into whether investors were misled about the depth of Merrill's losses in the fourth quarter. Mr. Cuomo also is investigating whether details of bonuses to Merrill employees should have been disclosed sooner.
