Tags: bove | bofa | asset | sales

Bove: BofA Could Break Itself Up

By    |   Friday, 11 Jun 2010 09:21 AM

Bank of America’s recent asset sales indicate it’s preparing to break itself up, just like Citigroup has done, says star bank analyst Dick Bove of Rochdale Securities.

BofA, the country’s largest bank, is dumping its holdings in two Latin American banks — Bank Itau Unibanco and Grupo Financiero Santander — for a combined $6.9 billion.

It’s also getting rid of a $2 billion private equity portfolio, as it faces pressure from regulators to raise a net $3 billion this year to replenish capital.

The sales indicate BofA will shrink to comply with the government’s desire for smaller banks, Bove says.

"What is relevant about the sale of the Mexican bank and other interests is that these sales represent what is now an ongoing restructuring of this company,” he wrote in a note to clients.

"More sales are quite likely of consumer finance-related businesses, asset management positions and other ventures. The bank may be remaking itself as a capital markets company with far reaching international interests."

President Obama appreciates BofA’s effort, Bove says.

"It has been selected by the White House as the only bank in America that really understands the new banking environment."

BofA probably didn’t want to give up the Santander stake, Gary Townsend, president of Hill-Townsend Capital, told Bloomberg.

But, “The government wanted Bank of America to slim down and reduce the size of its overseas exposure,” he said.

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Bank of America s recent asset sales indicate it s preparing to break itself up, just like Citigroup has done, says star bank analyst Dick Bove of Rochdale Securities. BofA, the country s largest bank, is dumping its holdings in two Latin American banks Bank Itau...
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Friday, 11 Jun 2010 09:21 AM
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