After months of public comment, including meetings in Boston and San Francisco, the Federal Reserve is expected to approve Bank of America Corp.’s deal to buy FleetBoston Financial Corp. today.
The deal, now valued at $48 billion, is the only item on the agenda for a 9 a.m. closed-door meeting of the Fed’s board of governors.
The central bank’s approval is the most important hurdle remaining for the deal, which was announced in October. B of A and Fleet shareholders are expected to endorse the merger when they vote in Boston and Charlotte March 17.
It is not clear whether the Fed will impose conditions on B of A. There is little branch overlap between the companies’ branch networks in the eight states where Fleet operates, though questions were raised in the fall about whether adding Fleet might tip B of A over the 10% national deposit cap. In its Fed application in November, B of A calculated its deposit share at 9.94%.
And at Fed hearings in January and other venues, critics have sought a more detailed community investment commitment from the Charlotte company, though it already has pledged to invest $750 billion over the next 10 years.
Meanwhile, both companies continue to face state and federal scrutiny along with other fund firms for alleged mutual fund trading abuses. Analysts and people at both companies say B of A and Fleet are eager to resolve the issues so they can get on with the merger.
On Friday, Financial Times reported that Bank of America could reach a settlement with regulators this month over allegations that its NationsFunds mutual fund unit helped a New Jersey hedge fund conduct improper or illegal fund trades. The newspaper, citing unnamed sources, said B of A was close to agreeing on a fine with New York Attorney General Eliot Spitzer, who first alleged B of A’s role in the scandal last September. Though Mr. Spitzer filed criminal charges against a B of A broker, the company itself has not been charged.
A Bank of America spokesman declined to comment Friday. A person familiar with the situation said the company wants to settle the case, though he said a settlement is “not imminent.”
On Thursday, Fleet’s Columbia Funds disclosed in securities filings that it had removed three portfolio managers who had been linked to alleged trading abuses at the firm. The three — Christopher Legallet, Kurt Havnaer, and Kimberly Campbell — are among nine employees Columbia put on administrative leave after charges arose.
The Securities and Exchange Commission and New York State have charged two Columbia units with civil fraud. They are accused of allowing some mutual fund customers to engage in market timing, or frequent trading, of funds — a practice Columbia publicly prohibited.
