World Clock

Friday, 22 October 2010

Merrill's Successful Integration Undermined by Countrywide's Lingering Liabilities

The acquisition of Merrill Lynch during the financial crisis actually helped #BAC in its recent earnings report. #BAC which brought Merrill Lynch during the height of the financial crisis boosted its revenue by $3.5bn through its fixed income trading division.

The major weakness for #BAC is the lingering toxic mortgage assets that it purchased from Countrywide financial also during the financial crisis. #BAC spent $417m tied to loans that were issued years earlier, which have now been found to be faulty. Were it not for the fixed income trading revenues from #BAC Merrill Lynch its earnings would have been substantially worse.

In actual fact #BAC fixed income trading arm perform considerably better than its rivals #JPM and #GS both of which saw a decline in revenues in this sector. #BAC investment banking unit bolstered by Merrill Lynch boosted its earnings to $1.4bn compared to $900m in Q2.

If it wasn’t for the fact that #BAC had to write down $10.4bn in goodwill impairment charges the bank would have actually earned $3.1bn in the third quarter.


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