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JPMorgan Chase & Co. (JPM), Wells Fargo & Co (WFC): A Very Savvy Move by Bank of America Corp (BAC)

It’s taken nearly five years, but it appears that Bank of America Corp (NYSE:BAC) is finally taking the bull by the horns. In its most recent 10-Q filing, Merrill Lynch revealed that it may be subsumed into Bank of America Corp (NYSE:BAC) before the end of this year.

This is a smart move by  Bank of America Corp (NYSE:BAC), which agreed to acquire Merrill Lynch in 2008. Since that time, the venerable brokerage has functioned as a subsidiary of  Bank of America Corp (NYSE:BAC), and the road to this full union has been rocky at times. Still, this merger should be beneficial to both parties — and here’s why.

Money will be saved, regulators will be happy
Keeping the two entities separate has been expensive and has added to the complexity of the Bank of America behemoth — just the kind of issues that CEO Brian Moynihan has targeted with his Project New BAC. Even after trimming $60 billion in unneeded bloat, the bank knows investors expect more.

As Bloomberg and The Wall Street Journal note, the move will help Moynihan attain $8 billion in savings this year, and please regulators who are nagging the biggest of the nation’s banks to make themselves less convoluted. More simplicity and transparency will aid in winding down these institutions if the need ever arises, something regulators have been pushing in the form of “living wills” for large financial institutions holding assets of $50 billion or more.

Brokers will be happier
Since  Bank of America Corp (NYSE:BAC) took over the failing brokerage, relations with Merrill advisors have been strained. Many were unable to make the transition, and B of A’s edicts regarding cross-selling and management fees have infuriated the herd.


Bringing Merrill into the bosom of the B of A family should, I think, help make these workers feel part of the team, thus easing some of the tension that still exists. Considering what a cash cow — er, bull — the unit has been, making these brokers feel at home is paramount. After all, JPMorgan Chase & Co. (NYSE:JPM) bought Bear Stearns in 2008 under circumstances similar to the  Bank of America Corp (NYSE:BAC) acquisition of Merrill, but chose to fold the purchase directly into the company. If their brokers grouse about JPMorgan Chase & Co. (NYSE:JPM), they’re not as vocal about it as the Merrill advisors have been.

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