BGN Entrepreneur

Bank of America could receive an additional bailout of billions of dollars to stave off the impact of Merrill Lynch’s fourth-quarter losses, after the closure of a deal between the two banks.
In September, the bank announced that it would pay $50 billion in shares for Merrill Lynch. The deal saved the Wall Street bank from the same fate as Lehman Brothers.
However, it is thought that BoA have warned the US Treasury in December that it would not close the deal due to the danger from Merrill’s larger-than-expected credit-related losses in the fourth quarter. Desperate for the transaction to go through, it is believed that the Treasury have agreed to protect BoA from Merrill’s losses, possibly via a cap on the amount of red ink that the bank would have to absorb because the Government stepped in to take responsibility for the remainder. And on January 1, BoA took ownership of Merrill.
So far, from the Government’s $700 billion Troubled Assets Relief Programme (Tarp), BoA has already received $25 billion, including $10 billion that Merrill would have received had their deal not gone through.
The details of the rescue plan have not been finalised but are expected to be announced after the bank reveals its fourth-quarter figures on January 20.

Related posts:

1. Bank of America Plans to cut 30,000 Jobs
   Bank of America is to cut 30,000 jobs over the...
2. Biggest Bank to Fail in US History
   The Seattle-based Washington Mutual Inc. (WaMu) was founded in 1889....
3. Tesco Surges Ahead but Finds it Hard to Seduce America
   The Fresh & Easy chain of Tesco, which was opened...
4. Four Line up at Bank
   The German bank WestLB, which is owned by the state...
5. US Tycoon Backs Virgin Bid for High Street Bank
   Wilbur Ross, the American tycoon, has confirmed a cah injection...