Bank of America: The Humble Beginnings and Tremendous MilestonesBank.pro Magazine Editor
One of the biggest financial services and banking companies in the US is Bank of America or Bank of America Corporation. It was created in 1998 as a result of BankAmerica being acquired by NationsBank. The main office of the bank is located in Charlotte, North Carolina.
Amadeo Peter Giannini established the Bank of Italy in San Francisco in 1904, which is when the bank’s history began. It was once held by Giannini’s holding firm, Transamerica Corporation until it finally evolved into the Bank of America.
The Bank of America Corporation’s history
When Bank of America, Los Angeles was established in 1923, the Bank of America name first appeared. The Bank of Italy of San Francisco bought it in 1928, and two years later it adopted the name Bank of America.
It is the first federally authorized joint-stock-owned bank in the United States. In addition, the only second bank to be granted a charter in the country Massachusetts Bank; whose charter dates back to 1784 and the beginning of the eastern branch of the Bank of America franchise. Following a 2004 merger between Bank of America and this bank, FleetBoston was created. In Charlotte, Commercial National Bank was established in 1874. In order to become American Commercial Bank, that bank amalgamated with American Trust Company in 1958.
When it merged with the Security National Bank of Greensboro two years later, it became the North Carolina National Bank. It joined forces with the Atlanta-based and Norfolk-based C&S/Sovran Corporation to establish NationsBank in 1991.
When NationsBank Corporation and BankAmerica Corporation merged in 1998, Bank of America Corporation was born. It is the third-largest bank in the U.S. It has more than 4,200 retail consumer banking facilities in 21 states and the District of Columbia. In Texas, California, Florida, Georgia, North Carolina, and Washington, the firm has the highest market share for deposits. Furthermore, the bank has four primary business divisions. They are Asset Management, Global Corporate and Investment Banking, Consumer Banking, and Commercial Banking. The company offers consumers in 48 states and 38 nations throughout the world financial goods, services, and solutions through these sectors.
What are the Bank’s Major Milestones?
Sale of China Construction Bank shares
One of China’s Big Four banks, China Construction Bank, was purchased by Bank of America for $3 billion in 2005. As a result, giving them a 9% share in the company. It was the company’s biggest entry into China’s expanding banking industry. With operations in Hong Kong, Shanghai, and Guangzhou, Bank of America was hoping that this transaction would significantly increase the size of its Chinese business. As part of the 2008 ALB Hong Kong Law Awards, Bank of America received the Project Finance Deal of the Year honor. Bank of America made intentions to sell off the majority of its holdings in the China Construction Bank in November 2011. Bank of America completely left the nation after it sold its last remaining interest in the China Construction Bank for up to $1.5 billion in September 2013.
Justice Department and $17 billion settlement
Following what was thought to be the biggest settlement in American corporate history, Bank of America agreed to a deal for close to $17 billion in August 2014. As a result, resolving allegations made against it pertaining to the sale of hazardous mortgage-linked products, particularly subprime mortgages. In a settlement with the U.S. Justice Department, the bank agreed to pay $9.65 billion in fines and $7 billion in compensation. It was given to those who had been harmed by the defective loans, including homeowners, borrowers, pension funds, and municipalities. According to real estate expert Jed Kolko, the $700 billion in losses caused to 11 million homes make the payment a “drop in the bucket” in comparison.
Federal Troubled Asset Relief Program
The U.S. government’s Troubled Asset Relief Program awarded $20 billion to Bank of America on January 16, 2009. In addition with a guarantee for $118 billion in possible damages (TARP). Additionally, the bank received an additional $25 billion under TARP in the fall of 2008. In order to maintain the merger of Bank of America and Merrill Lynch, an agreement was reached with the US government that included the extra payment. Though because U.S. Congress members had voiced serious concerns about how this money has been handled. Particularly since some of the beneficiaries have really been accused of squandering the bailout money.
Countrywide Financial acquisition
The bank revealed a $2 billion buyback deal for Countrywide Financial on August 23, 2007. The preferred stock transaction included the option to acquire common stock at a price of $18 per share and was structured to offer an annual return on investment of 7.25%.
Bank of America stated on January 11, 2008, that it will pay $4.1 billion to acquire Countrywide Financial. According to a report from March 2008, the Federal Bureau of Investigation (FBI) was looking into Countrywide for a potential mortgage and home loan fraud. The purchase was finalized in July 2008 and gave the bank a large market share of the mortgage industry. It also increased access to Countrywide’s capabilities for servicing mortgages, which was not hampered by this information.
It was thought that the transaction would save Countrywide from filing for bankruptcy. However, Countrywide refuted claims that it was on the verge of failure. As of December 31, 2007, Countrywide serviced nine million mortgages with a total value of $1.4 trillion.
With a 20–25% market share, this acquisition made the bank the largest mortgage originator and servicer in the United States. The merger was designed to combine Countrywide with the Red Oak Merger Corporation, a separate entity that Bank of America established. According to some, the deal’s structure was chosen to prohibit Countrywide from filing for bankruptcy in the event that it experienced significant losses, protecting the parent company from the negative effects. The name of Countrywide Financial is now Bank of America Home Loans.
After the BankAmerica-NationsBank merger was finalized, the new Bank of America ranked as the third-largest bank and thirteenth-largest firm in the United States. Lewis, the current CEO, by then was required to put plans into place that would ensure higher profitability and favorable financial outcomes because many experts believed the company had not yet realized the potential established by the 1998 merger. While the banking sector was unstable and constantly evolving, Bank of America looked to be well-positioned for success. However, its ability to integrate the 1990s acquisitions remained crucial to assuring future earnings.