Bank of America Corporation (BAC) said on Monday that it will spend $20 million in the fourth quarter of 2009 to re-launch the Merrill Lynch Wealth Management brand.
Following the re-launch, Merrill Lynch Wealth Management will be one of two primary units in Bank of America’s Global Wealth and Investment Management division.
Concurrently, BofA also announced the upcoming launch of the new help2 marketing campaign of Merrill Lynch Wealth Management, which reaffirms the value of the combined organization and brings to life the powerful potential of the one-to-one relationship between Merrill Lynch Financial Advisors and their clients.
Several senior executives departed after Bank of America acquired Merrill Lynch in January 2009. However, with the recovery of the industry the trend has reversed. Merrill Lynch is now adding more advisers to its 15,000-member broker force.
As part of the government’s $700 billion Troubled Asset Relief Program (TARP) to provide liquidity to the credit markets, BofA received $45 billion worth of government funds in two separate tranches. The bank received $25 billion as part of the initial round of investments and $20 billion in January shortly after its controversial acquisition of Merrill Lynch. The bank has not yet repaid any of the principal.
The announcement of the re-launch comes after CEO Ken Lewis said last week that he will retire at the end of the year. Lewis possible faces legal problems over BofA’s acquisition of Merrill Lynch & Co.
We think that BofA is in a relatively good shape from a capital perspective. During this vulnerable period of market stress, the availability of significant private-sector capital is very limited. As a result, the management remains focused on managing asset-levels efficiently, ensuring the deployment of TARP funds to core lending businesses and trimming other assets in non-core businesses.
We think that the management of Bank of America is quite confident about its capital position as it has indicated paying back TARP funds in installments. We anticipate continued synergies from the company’s large scale operation and balance sheet restructuring, but higher credit costs and worsening credit quality will be a drag on upcoming results. Therefore, we are recommending the shares as Neutral.
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