Bank of America Corporation (NYSE: BAC) is a financial services company, the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization. Bank of America serves clients in more than 150 countries and has a relationship with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. The company is a member of the Federal Deposit Insurance Corporation (FDIC) and a component of both the S&P 500 Index and the Dow Jones Industrial Average
The bank's 2008 acquisition of Merrill Lynch made Bank of America the world's largest wealth manager and a major player in the investment banking industry.
The company holds 12.2% of all U.S. deposits, as of August 2009, and is one of the Big Four Banks of the United States, along with Citigroup, JP Morgan Chase and Wells Fargo — its main competitors.
Corporate history
Bank of Italy
Main article: Bank of Italy (USA)Bank of America's history dates to 1904, when Amadeo Giannini founded the Bank of Italy in San Francisco, for the purpose of catering to immigrants other banks would not serve. Amadeo was raised by the Fava/Stanghellini family when his father was shot while trying to collect on a $10.00 debt. When the 1906 San Francisco earthquake struck, Giannini was able to get all of the deposits out of the bank building and away from the fires. Because San Francisco's banks were in smoldering ruins and unable to open their vaults, Giannini was able to use the rescued funds to start lending within a few days of the disaster. From a makeshift desk of a few planks over two barrels, he lent money to anyone who was willing to rebuild. He took great pride in later years that all of these loans were repaid.
In 1922, Giannini established Bank of America and Italy in Italy by buying Banca dell'Italia Meridionale, itself only established in 1918.
March 7, 1927, Mr. Giannini consolidated his Bank of Italy (101 branches) with the then newly formed Liberty Bank of America (175 branches). The result was the Bank of Italy National Trust & Savings Association with capital of $30,000,000, resources of $115,000,000.
In 1928, A. P. Giannini merged with Bank of America Los Angeles and consolidated it with his other bank holdings to create what would become the largest banking institution in the country. He renamed his Bank of Italy November 3, 1930, calling it Bank of America. The merger was completed in early 1929 and took the name Bank of America . The combined company was headed by Giannini with Monnette serving as co-Chair.
Growth in California
Giannini sought to build a national bank, expanding into most of the western states as well as into the insurance industry, under the aegis of his holding company, Transamerica Corporation. In 1953, regulators succeeded in forcing the separation of Transamerica Corporation and Bank of America under the Clayton Antitrust Act. The passage of the Bank Holding Company Act of 1956 prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America and Transamerica were separated, with the latter company continuing in the insurance business. However, federal banking regulators prohibited Bank of America's interstate banking activity, and Bank of America's domestic banks outside California were forced into a separate company that eventually became First Interstate Bancorp, which was acquired by Wells Fargo and Company in 1996. It was not until the 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside California.
New technologies also allowed credit cards to be linked directly to individual bank accounts. In 1958, the bank introduced the BankAmericard, which changed its name to VISA in 1975. A consortium of other California banks came up with Master Charge (now MasterCard) to compete with BankAmericard.'
Expansion outside California
Following the passage of the Bank Holding Company Act of 1967, BankAmerica Corporation was established for the purpose of owning Bank of America and its subsidiaries.
BankAmerica expanded outside California in 1983 with its acquisition of Seafirst Corporation of Seattle, Washington, and its wholly owned banking subsidiary, Seattle-First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the oil industry. BankAmerica continued to operate its new subsidiary as Seafirst rather than Bank of America until the 1998 merger with NationsBank.
BankAmerica was dealt huge losses in 1986 and 1987 by the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost. Though Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, Clausen was appointed to replace Armacost. The losses resulted in a huge decline of BankAmerica stock, making it vulnerable to a hostile takeover. First Interstate Bancorp of Los Angeles (which had originated from banks once owned by BankAmerica), launched such a bid in the fall of 1986, although BankAmerica rebuffed it, mostly by selling operations. It sold its FinanceAmerica subsidiary to Chrysler and the brokerage firm Charles Schwab and Co. back to Mr. Schwab. It also sold Bank of America and Italy to Deutsche Bank. By the time of the 1987 stock market crash, BankAmerica's share price had fallen to $8, but by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade.
BankAmerica's next big acquisition came in 1992. The company acquired its California rival, Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon, and Washington (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the largest bank acquisition in history. Federal regulators, however, forced the sale of roughly half of Security Pacific's Washington subsidiary, the former Rainier Bank, as the combination of Seafirst and Security Pacific Washington would have given BankAmerica too large a share of the market in that state. The Washington branches were divided and sold off to West One Bancorp (now U.S. Bancorp) and KeyBank. Later that year, BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada.
In 1994, BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago, which had become federally owned as part of the same oil industry debacle emanating from Oklahoma City's Penn Square Bank, that had brought down numerous financial institutions including Seafirst. At the time, no bank had the resources to bail out Continental, so the federal government operated the bank for nearly a decade. Illinois at that time regulated branch banking extremely heavily, so Bank of America Illinois was a single-unit bank until the 21st century. BankAmerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.
These mergers helped BankAmerica Corporation to once again become the largest U.S. bank holding company in terms of deposits, but the company fell to second place in 1997 behind fast-growing NationsBank Corporation, and to third in 1998 behind North Carolina's First Union Corp.
Merger of NationsBank and BankAmerica
In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4bn so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after the 1998 Russia bond default. BankAmerica was acquired by NationsBank later that year in October.
The purchase of BankAmerica Corp. by the NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation , and Bank of America NT&SA changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044, which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica.
Following the US$64.8 billion acquisition of BankAmerica by NationsBank, the resulting Bank of America had combined assets of US$570 billion, as well as 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined company will have a larger than 25 percent FDIC depos
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