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Fitch Ratings today affirmed Bank of America Corp.'s long- and short-term issuer default ratings as AA-/F1+ with a stable outlook. BofA's acquisition of Merrill Lynch & Co. Inc., completed today, "enhances the bank's already global presence" in several investment and banking activities, including issuance of credit cards, according to Fitch. "The affirmation of [BofA's] ratings reflects Fitch's opinion that the ... strategic and long-term benefits of the merger offset short-term challenges," Fitch said in a statement. Among the challenges facing BofA is continuing work to integrate previous acquisitions, including mortgage issuer Countrywide Financial Corp. and regional bank LaSalle Corp. And BofA faces risks inherent with integrating Merrill, which is "significant" due to cultural differences between commercial bank BofA and investment bank Merrill, according to Fitch. While BofA's growth by acquisition likely will lead to growth for the bank in the long run, BofA has had to set aside provisions to address "weakening trends" in a variety of loans, including credit cards, according to Fitch. "While the portion of the commercial and industrial loan portfolio not related to homebuilder finance has performed well to date, asset quality in this portfolio may also weaken as the economic downturn progresses," the rating agency writes.
