The past week has been rough for Bank of America Corp (NYSE:BAC), as problems pile on and its subpar behavior graced headlines. Toward the end of last week, it even looked as if the big old bank was losing some of its shine, as investors punished it brutally — admittedly in a less than upbeat market — after the stock had attained and held a position well above $13 per share for several days.
Even a corporate client appears to be considering giving the bank a big kiss-off. Reuters reports that megaretailer Wal-Mart Stores, Inc. (NYSE:WMT) is interviewing banks to oversee its $15.6 billion 401(k) retirement plan — an occupation that has been the task of Bank of America Corp (NYSE:BAC)’s Merrill Lynch division for the past 15 years.
Reuters notes that, while Wal-Mart Stores, Inc. (NYSE:WMT)’s retirement plan has high turnover and relatively small account balances, which might dull interest in taking over the plan, its sheer size is unusual, and may be why Wells Fargo & Co (NYSE:WFC) has entered into talks concerning taking over administrative duties from BAML. Bank of America Corp (NYSE:BAC) is involved in these talks, too, which may turn into a bidding war. According to benefits company Brightscope, other large retailers such as Costco Wholesale Corporation (NASDAQ:COST) and Target Corporation (NYSE:TGT) each have plans with assets in the $5 billion range.
Though experts say that benefit plans should be put out to bid every five years in order to secure the best deal, this is seldom done. Considering that Bank of America Corp (NYSE:BAC) has been servicing Wal-Mart Stores, Inc. (NYSE:WMT)’s plan for a decade and a half, it makes me wonder why the retailer has chosen this particular time to begin the bidding process.
One reason could be that Wells is actively pursuing such work. The bank took on the retirement plan of home improvement giant Lowe’s Companies, Inc. (NYSE:LOW) three years ago, which gives them a leg up on other possible competitors. Another is new regulations that require administrators to divulge their fees to clients, which may have prompted this action.
The bad news keeps piling on
It is likely the last issue that pushed Wal-Mart Stores, Inc. (NYSE:WMT) into soliciting bids, although no reason was given. While this seems more likely than the fact that that B of A has been going through a rough patch in the public relations arena lately, it’s still one more piece of bad news that the big bank just doesn’t need right now.