Chillin' out till it needs to be funded
After $50 bln of asset sales thru 2009-2011 the bank was unable to satisfy the Treasury of its dividend plans and barely made the stress test parameters in Q1 as its new plans to go global witha strategy look more like a ground to basics with a revert to nothing more than representative offices. The bank did snaga couple of people to fill the empty investment Bank desks as rainmakers’ exodus continued to hurt the banks investment bank rankings and league table scores in a bad deal making environment. Even as European High Yield debt offers better yields and the GReek situation moves from abd to worse, most of BofA’s global competitors have moved their focus to MENA and select Asian greographies with banking traction in Islamic banking and sovereign investments from Singapore and middle East keeping bigger deals alive globally. Some Credit Suisse staff in the US strengthened the bank’s dealmaking expertise in energy and renewables in yesterday’s announcements but the exodus has been pronounced outside the US , bank’s top IB executives preferring Nomura, UBS and the rest
On the chopping block now is the bank’s erst while Merrill Lynch Wealth unit globally. The non US Wealth management operations of Bank of America across Asia, Latin America and Europe. As usual Julius Baer would be an interested bidder, trying to expand in Asia, preferably China. However Asia expertise is better spread across erstwhile non US counterparts in the Deal making industryw ith Credit Suisse and Royal Bank of Canada having enough cash to bid for the otentially $2 bln purchase from Bank of America. Even ING had landed the same tab when they dealt out Asia in 2009.
In geographies like india, fidelity was able to exit with a deal premium of 4-5% of Assets under management. in this case though the Bank manages $2 t of assets globally, the wealth management unit is a tiny $90 B in AUM and the premium is unlikely to cross 2% at the top end of the range. Casino and Real Estate companies seem to thrive in Asia’s list of public corporations and Wealth management units have limited appeal as PE exits dwindled down since 2006 and avenues for Wealth to earn the break even return on parked funds became nearly impossible.