Wednesday, March 11, 2009

Bank Watch: What's BofA's worth?

TO BE NOTED: From The Deal:

"Bank of America is now valued at around $30 billion, but the bank's retail bank, commercial bank, credit card business, mortgage lending, investment bank and its acquisition of Merrill Lynch are worth almost nothing, argues Breaking Views. The remaining value in the institution comes from stakes it owns in Banco Santander SA's Mexico outfit, Brazil's Banco Itau, BlackRock Inc. and China Construction Bank.

Bank of America has been lumped in with Citigroup Inc. (NYSE:C) because both have taken the same amount of TARP bailout funds from the government. Nationalization rumors have plagued them both, and due to this their stock prices have pretty much reflected each other's over the past month. Although both stocks are up, Bank of America's Ken Lewis has been working hard to differentiate Bank of America with Citigroup, specifically citing that analysts expect Bank of America will produce more than $100 billion in revenue and post a profit in 2009, and there is doubt that Citigroup will be able to do the same, according to The Wall Street Journal.

Sydney Finkelstein of Dartmouth College's Tuck School of Business, who also wrote an article in Forbes titled "Why Ken Lewis Destroyed Bank of America," told WFAE he believes Lewis will have to be replaced in order for investors to regain confidence in Bank of America. "In my view I don't see how he can stay on. The board has been extremely patient. Perhaps they're thinking, 'Who can get us out of this mess? We don't have anyone else on the bench' -- which is a pretty big problem if that's the case. I think too much water has passed under the bridge. I think for Ken Lewis, it's going to be very tough to hold onto that CEO job." - Maria Woehr"

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