Evolution of the Bank of America - Essay Example

Before attaining its present status, the bank was known as Nations Bank and only became Bank of America when it made a deal to acquire Bank America in 1998. Up to that point, this was the largest acquisition deal in the banking sector. After the acquisition by Nations Bank of Bank America, the Bank of America emerged and, while it was technically an acquisition, this deal had a structure similar to that of a merger (James & James, 34).

After the Chairman and CEO of the Bank of America Hugh McColl resigned, his successor Ken Lewis focused the bank’s attention on efficiency and financial discipline, which was in contrast to earlier expansionary acquisition and merger strategies pursued by McColl. However, in 2004, the Bank of America acquired the National Processing Company from National Corp for some $1.4 billion, renaming it BA Merchant Services (James & James, 37). National Processing Company was at the time engaged in the processing of MasterCard and VISA transactions. As a result of this acquisition, this company now processed at least one in every six MasterCard and VISA transactions, while also expanding the Bank of America’s share of the financial solutions market, especially for healthcare and travel companies. In addition, the bank also acquired FleetBoston Financial in 2004 for some $47 billion, which was aimed at aiding the Bank of America to attain a market share in the United States' northeastern region (James & James, 38).

This solidified its position as the bank in the United States with the highest FDIC-rated deposit market share with over $513 billion in deposits. This placed well the Bank of America ahead of JP Morgan Chase-Bank One and Wells Fargo & Co, which had deposits of $353 billion and $228 billion respectively as of 2003 (James & James, 39). The Bank of America also announced the acquisition of MBNA, a credit card giant, for $35 billion in stocks and cash. This deal was given the final approval in December 2005 by the Federal Reserve Board, which gave the green light for the deal to be closed in January 2006. This combined card services organization, which included both the Bank of America and the former MBNA, had over 40 million accounts in the United States, as well as outstanding balances of more than $140 billion (James & James, 39). As a result, the Bank of America achieved a strengthened position in the United States credit card market.

The Bank of America also declared in 2006 that it was seeking to acquire the United States Trust Company, closing this deal in early 2007 and, during the same year, they made a historic acquisition deal that involved the acquisition of ABN Amro North America, LaSalle Corporate Finance, and LaSalle Bank Corporation. This purchase increased the bank’s assets to $1.7 trillion and increased its presence in Indiana, Michigan, and Illinois by 411 branches, 1.4 million retail customers, 17,000 commercial bank clients, and 1,500 ATMs (James & James, 40). In 2008, the Bank of America also acquired Countrywide Financial for $4.1 billion, making the bank the biggest mortgage servicer and originator and controlling ~25% of the market for home loans. Finally, Bank of America acquired Merrill Lynch in 2008 for $50 billion, which, at the time, made it the world’s largest financial services company. In addition, this acquisition also made the Bank of America, the 9th largest adviser on acquisitions and mergers, the 3rd largest global equity underwriter, and the biggest high-yield debt underwriter in the world (James & James, 41).