First of America Bank Corp. has agreed to pay Merrill Lynch & Co. $27.5 million in fees for advice in the bank's proposed $7.1 billion sale to National City Corp.
The fee, disclosed in a filing with the Securities and Exchange Commission, appears to be the second-largest ever paid to an investment bank for advising a commercial bank on a merger. Such fees have soared as the size of bank mergers has grown.
Last year Barnett Banks Inc. said it would pay $36.2 million to Morgan Stanley Dean Witter & Co. for the firm's advice in Barnett's $15.5 billion sale to NationsBank Corp.
CoreStates Financial Corp. agreed to pay $17.6 million to J.P. Morgan & Co. and $16.6 million to Credit Suisse First Boston Corp. for their roles in its planned $16.6 billion sale to First Union Corp.
Typically investment bankers collect higher fees if they advise a seller rather than a buyer because more time must be spent finding appropriate buyers and persuading the seller's board of directors that the best price possible has been negotiated.