How has Ken Lewis kept his job? With his buddy Vikram most certainly on the hot seat, this veteran banking deal man has destroyed much shareholder. He bit the bullet on Countrywide a year ago, and paid a premium for Merrill when it’s possible he could have pulled a Barclays and gotten them for cheap. Now this, more TARP money and a first loss in seventeen years.
Morning Call: January 16
Bank of America Corp., the largest U.S. bank by assets, posted its first loss since 1991 and cut the dividend after receiving emergency funds from the government to support the acquisition of Merrill Lynch & Co.
The fourth-quarter loss of $1.79 billion, or 48 cents a share, compared with net income of $268 million, or 5 cents, a year earlier, the Charlotte, North Carolina-based company said in a statement today. Results didn’t include a $15.3 billion loss at Merrill, acquired this month. The 32-cent dividend was slashed to a penny. Citigroup Inc. analyst Keith Horowitz estimated on Jan. 11 that the bank had a $3.6 billion loss.
The losses, coupled with the government lifeline of $138 billion, raise doubts about the future of Chief Executive Officer Kenneth D. Lewis, who engineered takeovers of unprofitable New York-based brokerage Merrill and ailing mortgage lender Countrywide Financial Corp. during the worst market slump since the Great Depression. Bank of America plummeted 75 percent in New York trading through yesterday since the Merrill deal was announced in September.
“This thing is unraveling so fast Lewis may know his job is lost,” said Paul Miller, an analyst at Friedman Billings Ramsey Group Inc. in Arlington, Virginia, who has an “underperform” rating on Bank of America. The management team has “lost credibility,” he said before results were announced.
Trader Daily � Bank of America Bailed Out Again, Then Reports Loss