Bank of America: In True National Spirit
Bank of America has been the true representative of the United States of America in the way it has grounded its feet not only in the US market, but also in the international financial arena. Bank of America, currently the second-largest bank in the US by assets (behind Citigroup), its history dates back when consolidation of banks followed by mergers and acquisitions of financial institutions across the US resulted in one supreme banking giant what we call it today as Bank of America. In mid 80’s, Bank America also faced the threat of hostile takeover due to a series of bad loans which it incurred in Latin America, followed by the black day at the stock market when it crashed in 1987 leaving bank’s share price at a mere US$ 8/share. However, the prices rebounded tremendously by 1992 to become one of the biggest gainers during 1987-1992.
With the US invasion of Iraq in the early 90’s the bank followed the footsteps of the US political front by acquiring Security Pacific Corporation and its subsidiaries to embark the largest bank acquisition of its time. 1994 was the year when Continental Illinois National Bank and Trust Co. of Chicago, were acquired, making Bank America to become the largest US bank holding company on the basis of deposits. Yet, the company lost its top ranking during 1997 and was left behind by the shining NationsBank Corporation. In 1998, NationsBank acquired BankAmerica, a San Francisco based bank and designated the corporation as "Bank of America” resulting in the biggest bank acquisition of its time.
Post 1998 Scenario
Since 1998, the performance of the bank has remained progressive in terms of mergers and acquisitions. Louisville, FleetBoston Financial, credit card giant MBNA are one of the biggest acquisitions by Bank of America followed by the Divestiture ventures in Brazil, Chile and Uruguay. Purchase of US Trust, Acquisition of ABN Amro North America and LaSalle Bank and Acquisition of Countrywide Financial are the recent aces in the financial deck of Bank OF America. In the recent past there were rumors that Bank of America may buy for U.K. bank Barclays, ensuing in the biggest financial-services deal ever would create top global bank. Many thought this would bring a New (Financial) World Order. However, these rumours died soon and the deal did not materialise.
Controversies Come With Success
Bank of America has been engaged in a number of controversies. Account closures without warning, excessive overdraft fees, missing computer tapes, website redirection weakness and Parmalat Bankruptcy case were some of the prominent scandals which the back faced in the past. Parmalat Bankruptcy case was one of its kinds. In December 2003, Parmalat SpA, an Italian food and dairy products company was declared bankrupt. This was followed by a claim in following September that the company held approximately U$5billion in assets with the bank in New York, about which the bank denied and said that there is no such account, exists. This resulted in a legal battle, which is still unsolved.
Going Forward
Banks main stream revenue generation comes from the local market. 90% of the total bank revenues come from with the US. Whereas, it is currently competing with Citigroup and JP Morgan Chase on the retail banking front.US$ 675 million have been spent on building the investment banking business where Bank of America is eyeing to become one of the top five investment banks in the world. The bank stands 9th on Fortune 500 where the main clientele of the bank comprises of 98% of Fortune 500 companies in the US, while 79% of the Fortune 500 is from the global front. The bank enjoys stakes in China Construction Bank, China's second largest bank. It has investment in India and is operating in many South American countries where its European headquarter is in London.
