Bank America

Bank America

Bank of America is the largest commercial bank in the United States by both deposits and market capitalization.

Have you heard of this big bank in the USA? It is one of the biggest in the planet.

Before 1998, the Bank of America organization that exists today was known as NationsBank and was previously known in earlier years as North Carolina National Bank before being abbreviated to "NCNB" as it branched out of its home base of Charlotte, North Carolina. In 1998, NationsBank acquired San Francisco based BankAmerica and renamed the corporation "Bank of America".

Bank of America has been involved in a number of controversial issues. Many of its corporate policies, such as biggest check first check clearing, overdraft fees, telemarketing, credit card application policy, and early account closures, have become heavily criticized. Bank of America controversies details some of the more controversial issues.

Bank of Italy

Many historical banks across the United States have been consolidated to the Bank of America. The most prominent is the Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904 based on catering to immigrants. When the 1906 San Francisco earthquake struck, Giannini was able to get all of the deposits out of the bank building and away from the fires.

In the late 1920s, Giannini approached Orra E. Monnette, President and founder of Bank of America, Los Angeles, about a merger between the two entities. The Los Angeles based bank had exhibited strong growth through out the 1920s, due in part to its success in developing an advanced branch banking system. The merger was completed in early 1929 and took the name Bank America. The combined company was headed by Giannini with Monnette serving as co Chair.

Growth in California

Giannini sought to build a national bank, expanding into most of the western states as well as into the insurance industry, under the aegis of his holding company, Transamerica Corporation. The passage of the Bank Holding Company Act of 1956, prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America and Transamerica were separated, with the latter company continuing in the insurance business. However, federal banking regulators prohibited Bank of America's interstate banking activity, and Bank of America's domestic banks outside California were forced into a separate company that eventually became First Interstate Bancorp, which was acquired by Wells Fargo and Company in 1996. It was not until the 80s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside California.

These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank introduced the BankAmericard, which changed its name to VISA in 1975. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.

Bank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.

Following the passage of the Bank Holding Company Act of 1967, BankAmerica Corporation was established for the purpose of owning Bank of America and its subsidiaries.

BankAmerica expanded outside California in 1983 with its acquisition of Seafirst Corporation of Seattle, Washington, and its wholly owned banking subsidiary, Seattle First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the oil industry. BankAmerica continued to operate its new subsidiary as Seafirst rather than Bank of America until the 1998 merger with NationsBank.

BankAmerica was dealt huge losses in 1986 and 1987 by the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost. Though Armacost blamed the problems on his predecessor, A.W. Clausen, Clausen was appointed to replace Armacost. The losses resulted in a huge decline of BankAmerica stock, making it vulnerable to a hostile takeover. First Interstate Bancorp of Los Angeles, launched such a bid in the fall of 1986, although BankAmerica rebuffed it, mostly by selling its FinanceAmerica subsidiary to Chrysler, and by selling the brokerage firm Charles Schwab and Co. back to Mr. Schwab. By the time of the 1987 stock market crash, BankAmerica's share price had fallen to $8, but by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade.

BankAmerica's next big acquisition came in 1992. The company acquired its California rival, Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon and Washington. This was, at the time, the largest bank acquisition in history. Federal regulators, however, forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, as the combination of Seafirst and Rainier would have given BankAmerica too large a share of the market in that state. Later that year, BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada.

In 1994, BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago, which had become federally owned as part of the same oil industry debacle emanating from Oklahoma City's Penn Square Bank, that had brought down numerous financial institutions including Seafirst. At the time, no bank had the resources to bail out Continental, so the federal government operated the bank for nearly a decade. Illinois at that time regulated branch banking extremely heavily, so Bank of America Illinois was a single unit bank until the 21st century. BankAmerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.

These mergers helped BankAmerica Corporation to once again become the largest U.S. bank holding company in terms of deposits, but the company fell to second place in 1997 behind fast growing NationsBank Corporation, and to third in 1998 behind North Carolina's First Union Corp. In 1998, BankAmerica was purchased by North Carolina based NationsBank, and changed the headquarters to Charlotte, North Carolina.

Merger of NationsBank and BankAmerica

In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4bn so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after 1998 Russia bond default. BankAmerica was later acquired by NationsBank that year.

The purchase of BankAmerica Corp. by the NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation, and Bank of America NT&SA, changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044 which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica.

Following the US$64.8 billion acquisition of BankAmerica by NationsBank, the resulting Bank of America had combined assets of US$570 billion, as well as 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined company will have a larger than 25 percent FDIC deposit market share in a particular state or 10 percent deposit market share overall.

History since 1998

In 2001, Bank of America CEO and chairman Hugh McColl stepped down and named Ken Lewis as his successor. Lewis's greater focus on financial discipline and efficiency contrasted greatly with the expansionary mergers and acquisition strategy of his predecessor.

Acquisition of National Processing Company

In 2004, Bank of America purchased Louisville, Kentucky based National Processing Company for $1.4 billion from National City Corp. The company was renamed BA Merchant Services. The company provides financial solutions for travel and healthcare companies. BA Merchant Services is headquartered in Louisville, with a call center in El Paso, Texas.

FleetBoston Financial merger

Also in 2004, Bank of America acquired Boston, Massachusetts-based FleetBoston Financial for $47 billion in an all-stock deal to solidify Bank of America's position as the bank with the largest FDIC-rated deposit market share in the United States with $513 billion in deposits, well ahead of the number two bank holding company, newly-merged JPMorgan Chase-Bank One with $353 billion in deposits and number three Wells Fargo & Co. with $228 billion (as of 30 June 2003). This acquisition gave Bank of America access to the northeastern market.

Ameirca, Amercia, Amerca

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