financeThe Best European PerformersThere are no flavor-of-the-month outfits or dot-com hangers-on in the European BusinessWeek 50. Only companies whose managers know how to earn money in good times and bad make the grade.Name an economic malady and Europe has it in abundance right now: sluggish economic growth, lackluster consumer spending, currency swings that hurt exports, and depressed stock markets. For that reason, BusinessWeek could not have picked a better time to launch its first annual ranking of Europe's 50 best-performing companies. You won't find any frothy flavor-of-the-month outfits or dot-com hangers-on among these stalwarts. The BW Europe 50 is instead studded with companies whose managers know how to make money in good times and bad. What do corporations such as British bank HBOS (No. 1), Belgian utility Electrabel (No. 4), and Swedish apparel retailer H&M Hennes & Mauritz (No. 8) have in common? All have made singular progress in boosting sales, increasing profits, and delivering superior returns to investors in these worst of times for much of Europe. "Such top performers excel mainly because of good management that knows what to do in a difficult environment," says Robert Parkes, a European analyst at HSBC Bank in London. "They're doing well because they've kept in touch with what their customers and shareholders want."Most of the companies that powered to the top of this inaugural list are top-notch names with the size, stamina, and savvy needed to thrive in turbulent times. Energy companies like Total and financial-services companies such as Royal Bank of Scotland Group figure prominently. So do retail and consumer-staple giants such as France's Carrefour and Switzerland's Nestlé. Notable by their absence are Europe's big technology and telecom companies. Only three made it onto our top 50 list: France's Bouygues, Italy's Telecom Italia Mobile, and Finland's Nokia. Absent from the top 50 are powerhouses such as Germany's SAP, Geneva-based STMicroelectronics, and France's Alcatel. Blame the poor tech showing on three years of weak revenue growth, poor profitability, and, most of all, sagging stock market valuations.As investors know all too well, companies can manage impressive profits one year, only to disappoint the next. That's why the BW Europe 50 rewards those with staying power. To generate our ranking we used a series of criteria that judge the performance of the companies in the Standard & Poor's Europe 350 stock index over both one and three years.The turmoil in the markets over the past year means that today's darling can become tomorrow's dog almost overnight. That's why it's important not to see the BW Europe ranking as an all-knowing investment guide. Even stellar performers have their ups and downs from year to year. Take German pharmaceutical firm Altana and Spanish construction and engineering company Grupo Dragados. They beat all comers with total returns of 160.2% and 140.6%, respectively, between June 30, 2000, and June 30, 2003. However, both companies have delivered lower returns in recent months and neither Altana nor Grupo Dragados would appear in the top 50 if the ranking was based simply on the returns generated over the past 12 months.There's a definite British tilt in the European BW 50: British enterprises dominate, accounting for 17 of the 50 and 6 of the top 10. In part, that's because Britain has the most publicly traded companies of any European nation. That automatically increases the odds for British companies. Other elements are at work, though: The British economy has outperformed the 12-member euro zone in each of the past three years, and British companies have benefited from more buoyant domestic demand. France and Spain are also well represented. By contrast, although the German economy is the biggest in Europe by far, there isn't a single German company among the top 20. "Many German companies, such as car manufacturers, are well managed," says Paul Strebel, a professor at the IMD-International Institute for Management Development in Lausanne, Switzerland. "But the environment is more difficult there in terms of the macro background and structural rigidities."What's the secret of Anglo-Saxon corporate prowess? British companies operate in a freer environment than many of their Continental competitors. They do not suffer from the same labor restrictions, heavy social-security burden, and other structural impediments that hold back enterprises in many countries. It would have been much more difficult for HBOS, Royal Bank of Scotland Group, and HSBC Holdings to cut costs and exploit synergies as aggressively as they have done over the past three years if they had been headquartered in Germany rather than Britain. Yet structural reforms now wending their way through the German parliament may give Teutonic companies a competitive jolt. Also, notable absentees from this year's list, such as Deutsche Bank, could well make it next year, thanks to their belated cost-cutting efforts.The European BW 50 also provides proof that, despite the long-standing argument over whether mergers generate shareholder value, they can and do create powerful, successful companies. HBOS and Royal Bank of Scotland, the two top-performing banks on the list, both British, prove the point. HBOS, which heads the overall ranking, was created in 2001 when Bank of Scotland joined forces with Halifax PLC, a mortgage specialist. A year earlier, Royal Bank of Scotland, No.3 on our list, acquired National Westminster Bank PLC. The merged entities now not only outrank British arch-rivals HSBC (No. 48) and Barclays PLC (No. 52), but also every bank on the Continent. "We have the financial strength and flexibility needed to sustain growth and manage risk in an uncertain world," says HBOS Chief Executive James Crosby. "Our merger continues to exceed expectations."Meanwhile, ongoing consolidation within the global pharmaceutical industry has produced some of Europe's biggest mergers. The 1999 union of Sweden's Astra and Britain's Zeneca gave birth to Europe's third-largest drug company -- and No.35 on our list. A year later, rival British drugmakers GlaxoWellcome and Smith-Kline Beecham joined forces, to form the global No. 2, behind Pfizer of the U.S.With a market value of 105 billion euros, GlaxoSmithKline PLC also ranks No.2 in the BW Europe 50. Glaxo boosted net income 27% last year to produce an astounding 62% return on equity in 2002. Despite shareholder criticism of the size of senior executive pay-packages, CEO Jean-Pierre Garnier told shareholders in May that the group's "effective cost control" and "promising early-stage R&D pipeline" give it an edge over its competitors.One of the most striking things about the BW Europe 50 is the presence of so many energy and utility companies. In all, there are 13 producers, refiners, and distributors of oil, natural gas, and electricity. Some want to extract the energy and avoid the costly business of selling the end product. Oil giant Total, for example, is making a major bet on finding new acreage. "We are benefiting from a very clear long-term strategy of giving priority to the upstream," said Christophe de Margerie, president of exploration and production.Total benefited from a rise in world oil prices, but those companies in power generation and distribution had to combat three years of stalled demand for power by consumers and companies. Plus, privatization, deregulation, and mounting competition have limited the ability of these companies to push through rate hikes. To make matters worse, many European energy outfits temporarily fell out of favor with investors following the collapse of Enron Corp. in 2001 on the other side of the Atlantic.Despite the tough odds, European power producers such as Belgium's Electrabel (No. 4) and Italy's ENI (No. 28) managed to assert themselves. Both have a commanding presence in their domestic markets. And, as a result of collapsing borders and deregulation, they have been able to push deep into markets elsewhere in the European Union. Electrabel has made significant breakthroughs into France, Italy, and Spain, and now chalks up 37% of its sales abroad. All told, Electrabel increased sales by 18% over the past year. Its success sends an important message to the rest of Europe: Companies that exploit opportunities stemming from deregulation and the single currency are poised to excel.Then there's retail. Stagnant economies and rising joblessness have caused consumers in many parts of the Old World to pull in their horns. At the same time, fierce competition and deflationary pressures have forced down prices for many goods. That's hardly an optimal climate for retail chains. Yet seven retailers of one sort or another made it into the European BW 50. British supermarket operator Tesco PLC (No. 10) shows that grocers can sparkle even in tough markets. The group, headquartered in Hertfordshire, England, spent 300 million euros last year in a successful bid to wrest market share from rivals such as J. Sainsbury PLC, slashing prices and opening 62 new stores in Britain. Whereas many retailers saw profits plunge, Tesco's surged 14% in 2002. Tesco also runs the world's most successful online supermarket, which it is now replicating from Korea to Central Europe to the U.S., via a partnership with its American peer, Safeway.Giving customers what they want at a reasonable price is also paying big dividends at Swedish apparel retailer H&M Hennes & Mauritz (No. 8). The chain has 893 stores in 17 countries and plans to open another 110 this year, including 20 in the U.S. "We've halved the time it takes to open new stores, to an average of four to five weeks," says CEO Rolf Eriksen. "This doesn't reduce start-up costs, but it does help accelerate sales."H&M has long been an investor favorite. On the flip side, companies that investors shunned just 12 months ago are back in favor. France Télécom, for example, generated a jaw-dropping 161.6% shareholder return over the past year, thanks to the appointment of turnaround whiz Thierry Breton as CEO and investor enthusiasm for his plan to slash the company's massive debt load and trim operating expenses. Despite its improved outlook, though, France Télécom didn't make it into the top 50 because its performance in the previous two years was so dire. The same goes for other telcos such as Deutsche Telekom and Britain's BT Group, which are rebounding but still dealing with post-boom excesses.Despite their strengths, many of the companies in the BW Europe 50 face new challenges. Although there are some signs that the euro- zone economy is finally beginning to recover, consumers are still reluctant to splurge on big-ticket items. According to the European Automobile Manufacturers' Assn., European car sales were down 2.6% in unit terms during the first six months of 2003. Notwithstanding cheap financing deals and special offers, demand for autos could drop further in the coming months. Innovation, expansion into new markets, and deft control over manufacturing will set the winners apart from the losers, and likely continue to benefit the four carmakers on our list: France's PSA Peugeot Citroën (No. 15), Renault (No. 19), Germany's BMW (No. 21), and Porsche (No. 27).Luxury carmakers Porsche and BMW are expected to boost revenues and outmaneuver rivals, even in the stagnant Western European market. As the U.S. and European car markets went into a tailspin, Porsche moved quickly to trim production of its classic 911 and Boxster models. It also introduced the Cayenne, a racy new sport-utility vehicle that is powering sales and more than offsetting the decline in sportscar sales. The Stuttgart-based carmaker has returned 39% in value to shareholders over the past three years.It does help that global consumers have demonstrated a willingness to spend more of their income on luxury cars. The premium auto segment is growing at nearly twice the annual clip of the mass market. "The outlook for German luxury brands in the U.S. is extremely bright in sedans and SUVs," says Stephen B. Cheetham, auto analyst at Sanford C. Bernstein & Co.Meanwhile, the strong euro is giving headaches to many European companies -- and that could eventually include the luxury carmakers. Most vulnerable are exporters and those with large dollar revenues. If, as some currency traders predict, the euro hits $1.25 by year end, BMW, Carrefour, Sanofi-Synthélabo, and other companies with large sales outside the euro zone could see their revenues crimped.Yet for every euro loser there will be a euro winner. Companies that source a large portion of their products outside Europe stand to gain, as wages and other production costs decline when measured in euros. H&M's Eriksen says his company has already reaped some benefits. "As the euro strengthens," he says, "so does our purchasing power. That enables us to pass on those gains to consumers through lower prices."Falling interest rates could also spell relief for European businesses. With the benchmark European Central Bank rate at 2%, interest rates for most companies in the euro zone are at their lowest level in a generation. And the consensus among economists is that the ECB will cut rates again before the end of the year. On the Continent, cheap money is changing the dynamics of corporate performance. For starters, it makes it easier for heavily indebted enterprises to refinance themselves, which is one reason why many telcos have been able to stage a recovery in recent months.The biggest impact of low interest rates could be to underpin the recovery of the equity markets and create an environment in which managers are once again willing to assume big capital-market risks, such as mergers and acquisitions.The process has already started. In June, Italy's Banca Generali acquired compatriot Banca Privamera for 50 million euros in cash and 202 million euros in shares. A return to the go-go days of the late 1990s is probably still a long way off, however. And despite all the uncertainties about the euro, interest rates, and the economy, the European companies that are likely to thrive over the next year will be the ones that can do what the winners have done over the past three years: cut costs, widen margins, develop a more intimate and lucrative relationship with customers, and generate more profits.By David Fairlamb, with Jack Ewing and Gail Edmondson in Frankfurt, Kerry Capell and Stanley Reed in London, and Andy Reinhardt in Paris, and Frederick F. Jespersen in New YorkGet BusinessWeek directly on your desktop with our RSS feeds.Add BusinessWeek news to your Web site with our headline feed.Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.To subscribe online to BusinessWeek magazine, please click here.Learn more, go to the BusinessWeekOnline home page# posted by brijesh agarwal @ 10:19 PM 0 Comments banks-financeThursday, July 12, 2007Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world.[3][4] Bank of America is the largest American company (by market capitalization) that is not part of the Dow Jones Industrial Average. On July 19, 2006, Bank of America reported second quarter 2006 net income of $5.48 billion,[5] surpassing that of Citigroup for the first time.Contents[hide]1 Corporate history1.1 Pre-1998 history1.1.1 Bank of Italy1.1.2 Growth in California1.1.3 Expansion outside of California1.2 Merger of NationsBank and BankAmerica1.3 History since 19981.3.1 Acquisition of National Processing Company1.3.2 FleetBoston Financial merger1.3.3 Purchase of MBNA1.3.4 Divestiture of Brazil operations1.3.5 Plans to acquire LaSalle Bank2 Bank of America today2.1 Consumer2.2 Corporate2.3 Investment Management2.4 Social responsibility3 Controversy and criticism4 International operations5 Bank of America corporate buildings6 Diversity7 Major sponsorships7.1 Official bank of8 References9 See also10 External links//[edit] Corporate historyIt has been suggested that NationsBank be merged into this article or section. (Discuss)Before 1993, the Bank of America that exists today was known as NationsBank, based in Charlotte, NC. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name.[edit] Pre-1998 history[edit] Bank of ItalyThe roots of the pre-1998 Bank of America lie in the American Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904. 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. Thus, unlike many other banks, he retained the confidence of the depositors and also had money to loan to those struck by the disaster.In the late 1920s, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bank of America, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bank of America. The combined company was headed by Giannini with Monnette serving as co-Chair.While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bank of America was the only NT&SA in the country. Thanks to good management, but also to aggressive development of the branch banking concept, the bank was soon the largest in California.[edit] Growth in CaliforniaGiannini also 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. Bank of America NT&SA also had banking relationships in international financial markets. Largely out of fear that Giannini would succeed in his efforts to create a nationwide bank, federal legislation prohibited banks from accepting deposits in states where they were not headquartered. This led to the creation of the bank holding company which could own a separate bank in each state.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 of 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 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside of California.California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during World War II), resulting in Bank of America being swamped by checks. By 1949 , the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally credited, together with General Electric and SRI International, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank invented the bank credit card, the BankAmericard, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.[edit] Expansion outside of CaliforniaBank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.Following 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 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then 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 (which had originated from banks once owned by BankAmerica), 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. On the day of the 1987 stock market crash, BankAmerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.[citation needed]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 (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because 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 that had brought down 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 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 and NationsBank executed a merger-of-equals and changed the headquarters to Charlotte, North Carolina.[edit] Merger of NationsBank and BankAmericaIn 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
posted by vishal @ 1:00 PM 0 Comments
finance - banking
financeThe Best European PerformersThere are no flavor-of-the-month outfits or dot-com hangers-on in the European BusinessWeek 50. Only companies whose managers know how to earn money in good times and bad make the grade.Name an economic malady and Europe has it in abundance right now: sluggish economic growth, lackluster consumer spending, currency swings that hurt exports, and depressed stock markets. For that reason, BusinessWeek could not have picked a better time to launch its first annual ranking of Europe's 50 best-performing companies. You won't find any frothy flavor-of-the-month outfits or dot-com hangers-on among these stalwarts. The BW Europe 50 is instead studded with companies whose managers know how to make money in good times and bad. What do corporations such as British bank HBOS (No. 1), Belgian utility Electrabel (No. 4), and Swedish apparel retailer H&M Hennes & Mauritz (No. 8) have in common? All have made singular progress in boosting sales, increasing profits, and delivering superior returns to investors in these worst of times for much of Europe. "Such top performers excel mainly because of good management that knows what to do in a difficult environment," says Robert Parkes, a European analyst at HSBC Bank in London. "They're doing well because they've kept in touch with what their customers and shareholders want."Most of the companies that powered to the top of this inaugural list are top-notch names with the size, stamina, and savvy needed to thrive in turbulent times. Energy companies like Total and financial-services companies such as Royal Bank of Scotland Group figure prominently. So do retail and consumer-staple giants such as France's Carrefour and Switzerland's Nestlé. Notable by their absence are Europe's big technology and telecom companies. Only three made it onto our top 50 list: France's Bouygues, Italy's Telecom Italia Mobile, and Finland's Nokia. Absent from the top 50 are powerhouses such as Germany's SAP, Geneva-based STMicroelectronics, and France's Alcatel. Blame the poor tech showing on three years of weak revenue growth, poor profitability, and, most of all, sagging stock market valuations.As investors know all too well, companies can manage impressive profits one year, only to disappoint the next. That's why the BW Europe 50 rewards those with staying power. To generate our ranking we used a series of criteria that judge the performance of the companies in the Standard & Poor's Europe 350 stock index over both one and three years.The turmoil in the markets over the past year means that today's darling can become tomorrow's dog almost overnight. That's why it's important not to see the BW Europe ranking as an all-knowing investment guide. Even stellar performers have their ups and downs from year to year. Take German pharmaceutical firm Altana and Spanish construction and engineering company Grupo Dragados. They beat all comers with total returns of 160.2% and 140.6%, respectively, between June 30, 2000, and June 30, 2003. However, both companies have delivered lower returns in recent months and neither Altana nor Grupo Dragados would appear in the top 50 if the ranking was based simply on the returns generated over the past 12 months.There's a definite British tilt in the European BW 50: British enterprises dominate, accounting for 17 of the 50 and 6 of the top 10. In part, that's because Britain has the most publicly traded companies of any European nation. That automatically increases the odds for British companies. Other elements are at work, though: The British economy has outperformed the 12-member euro zone in each of the past three years, and British companies have benefited from more buoyant domestic demand. France and Spain are also well represented. By contrast, although the German economy is the biggest in Europe by far, there isn't a single German company among the top 20. "Many German companies, such as car manufacturers, are well managed," says Paul Strebel, a professor at the IMD-International Institute for Management Development in Lausanne, Switzerland. "But the environment is more difficult there in terms of the macro background and structural rigidities."What's the secret of Anglo-Saxon corporate prowess? British companies operate in a freer environment than many of their Continental competitors. They do not suffer from the same labor restrictions, heavy social-security burden, and other structural impediments that hold back enterprises in many countries. It would have been much more difficult for HBOS, Royal Bank of Scotland Group, and HSBC Holdings to cut costs and exploit synergies as aggressively as they have done over the past three years if they had been headquartered in Germany rather than Britain. Yet structural reforms now wending their way through the German parliament may give Teutonic companies a competitive jolt. Also, notable absentees from this year's list, such as Deutsche Bank, could well make it next year, thanks to their belated cost-cutting efforts.The European BW 50 also provides proof that, despite the long-standing argument over whether mergers generate shareholder value, they can and do create powerful, successful companies. HBOS and Royal Bank of Scotland, the two top-performing banks on the list, both British, prove the point. HBOS, which heads the overall ranking, was created in 2001 when Bank of Scotland joined forces with Halifax PLC, a mortgage specialist. A year earlier, Royal Bank of Scotland, No.3 on our list, acquired National Westminster Bank PLC. The merged entities now not only outrank British arch-rivals HSBC (No. 48) and Barclays PLC (No. 52), but also every bank on the Continent. "We have the financial strength and flexibility needed to sustain growth and manage risk in an uncertain world," says HBOS Chief Executive James Crosby. "Our merger continues to exceed expectations."Meanwhile, ongoing consolidation within the global pharmaceutical industry has produced some of Europe's biggest mergers. The 1999 union of Sweden's Astra and Britain's Zeneca gave birth to Europe's third-largest drug company -- and No.35 on our list. A year later, rival British drugmakers GlaxoWellcome and Smith-Kline Beecham joined forces, to form the global No. 2, behind Pfizer of the U.S.With a market value of 105 billion euros, GlaxoSmithKline PLC also ranks No.2 in the BW Europe 50. Glaxo boosted net income 27% last year to produce an astounding 62% return on equity in 2002. Despite shareholder criticism of the size of senior executive pay-packages, CEO Jean-Pierre Garnier told shareholders in May that the group's "effective cost control" and "promising early-stage R&D pipeline" give it an edge over its competitors.One of the most striking things about the BW Europe 50 is the presence of so many energy and utility companies. In all, there are 13 producers, refiners, and distributors of oil, natural gas, and electricity. Some want to extract the energy and avoid the costly business of selling the end product. Oil giant Total, for example, is making a major bet on finding new acreage. "We are benefiting from a very clear long-term strategy of giving priority to the upstream," said Christophe de Margerie, president of exploration and production.Total benefited from a rise in world oil prices, but those companies in power generation and distribution had to combat three years of stalled demand for power by consumers and companies. Plus, privatization, deregulation, and mounting competition have limited the ability of these companies to push through rate hikes. To make matters worse, many European energy outfits temporarily fell out of favor with investors following the collapse of Enron Corp. in 2001 on the other side of the Atlantic.Despite the tough odds, European power producers such as Belgium's Electrabel (No. 4) and Italy's ENI (No. 28) managed to assert themselves. Both have a commanding presence in their domestic markets. And, as a result of collapsing borders and deregulation, they have been able to push deep into markets elsewhere in the European Union. Electrabel has made significant breakthroughs into France, Italy, and Spain, and now chalks up 37% of its sales abroad. All told, Electrabel increased sales by 18% over the past year. Its success sends an important message to the rest of Europe: Companies that exploit opportunities stemming from deregulation and the single currency are poised to excel.Then there's retail. Stagnant economies and rising joblessness have caused consumers in many parts of the Old World to pull in their horns. At the same time, fierce competition and deflationary pressures have forced down prices for many goods. That's hardly an optimal climate for retail chains. Yet seven retailers of one sort or another made it into the European BW 50. British supermarket operator Tesco PLC (No. 10) shows that grocers can sparkle even in tough markets. The group, headquartered in Hertfordshire, England, spent 300 million euros last year in a successful bid to wrest market share from rivals such as J. Sainsbury PLC, slashing prices and opening 62 new stores in Britain. Whereas many retailers saw profits plunge, Tesco's surged 14% in 2002. Tesco also runs the world's most successful online supermarket, which it is now replicating from Korea to Central Europe to the U.S., via a partnership with its American peer, Safeway.Giving customers what they want at a reasonable price is also paying big dividends at Swedish apparel retailer H&M Hennes & Mauritz (No. 8). The chain has 893 stores in 17 countries and plans to open another 110 this year, including 20 in the U.S. "We've halved the time it takes to open new stores, to an average of four to five weeks," says CEO Rolf Eriksen. "This doesn't reduce start-up costs, but it does help accelerate sales."H&M has long been an investor favorite. On the flip side, companies that investors shunned just 12 months ago are back in favor. France Télécom, for example, generated a jaw-dropping 161.6% shareholder return over the past year, thanks to the appointment of turnaround whiz Thierry Breton as CEO and investor enthusiasm for his plan to slash the company's massive debt load and trim operating expenses. Despite its improved outlook, though, France Télécom didn't make it into the top 50 because its performance in the previous two years was so dire. The same goes for other telcos such as Deutsche Telekom and Britain's BT Group, which are rebounding but still dealing with post-boom excesses.Despite their strengths, many of the companies in the BW Europe 50 face new challenges. Although there are some signs that the euro- zone economy is finally beginning to recover, consumers are still reluctant to splurge on big-ticket items. According to the European Automobile Manufacturers' Assn., European car sales were down 2.6% in unit terms during the first six months of 2003. Notwithstanding cheap financing deals and special offers, demand for autos could drop further in the coming months. Innovation, expansion into new markets, and deft control over manufacturing will set the winners apart from the losers, and likely continue to benefit the four carmakers on our list: France's PSA Peugeot Citroën (No. 15), Renault (No. 19), Germany's BMW (No. 21), and Porsche (No. 27).Luxury carmakers Porsche and BMW are expected to boost revenues and outmaneuver rivals, even in the stagnant Western European market. As the U.S. and European car markets went into a tailspin, Porsche moved quickly to trim production of its classic 911 and Boxster models. It also introduced the Cayenne, a racy new sport-utility vehicle that is powering sales and more than offsetting the decline in sportscar sales. The Stuttgart-based carmaker has returned 39% in value to shareholders over the past three years.It does help that global consumers have demonstrated a willingness to spend more of their income on luxury cars. The premium auto segment is growing at nearly twice the annual clip of the mass market. "The outlook for German luxury brands in the U.S. is extremely bright in sedans and SUVs," says Stephen B. Cheetham, auto analyst at Sanford C. Bernstein & Co.Meanwhile, the strong euro is giving headaches to many European companies -- and that could eventually include the luxury carmakers. Most vulnerable are exporters and those with large dollar revenues. If, as some currency traders predict, the euro hits $1.25 by year end, BMW, Carrefour, Sanofi-Synthélabo, and other companies with large sales outside the euro zone could see their revenues crimped.Yet for every euro loser there will be a euro winner. Companies that source a large portion of their products outside Europe stand to gain, as wages and other production costs decline when measured in euros. H&M's Eriksen says his company has already reaped some benefits. "As the euro strengthens," he says, "so does our purchasing power. That enables us to pass on those gains to consumers through lower prices."Falling interest rates could also spell relief for European businesses. With the benchmark European Central Bank rate at 2%, interest rates for most companies in the euro zone are at their lowest level in a generation. And the consensus among economists is that the ECB will cut rates again before the end of the year. On the Continent, cheap money is changing the dynamics of corporate performance. For starters, it makes it easier for heavily indebted enterprises to refinance themselves, which is one reason why many telcos have been able to stage a recovery in recent months.The biggest impact of low interest rates could be to underpin the recovery of the equity markets and create an environment in which managers are once again willing to assume big capital-market risks, such as mergers and acquisitions.The process has already started. In June, Italy's Banca Generali acquired compatriot Banca Privamera for 50 million euros in cash and 202 million euros in shares. A return to the go-go days of the late 1990s is probably still a long way off, however. And despite all the uncertainties about the euro, interest rates, and the economy, the European companies that are likely to thrive over the next year will be the ones that can do what the winners have done over the past three years: cut costs, widen margins, develop a more intimate and lucrative relationship with customers, and generate more profits.By David Fairlamb, with Jack Ewing and Gail Edmondson in Frankfurt, Kerry Capell and Stanley Reed in London, and Andy Reinhardt in Paris, and Frederick F. Jespersen in New YorkGet BusinessWeek directly on your desktop with our RSS feeds.Add BusinessWeek news to your Web site with our headline feed.Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.To subscribe online to BusinessWeek magazine, please click here.Learn more, go to the BusinessWeekOnline home page# posted by brijesh agarwal @ 10:19 PM 0 Comments banks-financeThursday, July 12, 2007Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world.[3][4] Bank of America is the largest American company (by market capitalization) that is not part of the Dow Jones Industrial Average. On July 19, 2006, Bank of America reported second quarter 2006 net income of $5.48 billion,[5] surpassing that of Citigroup for the first time.Contents[hide]1 Corporate history1.1 Pre-1998 history1.1.1 Bank of Italy1.1.2 Growth in California1.1.3 Expansion outside of California1.2 Merger of NationsBank and BankAmerica1.3 History since 19981.3.1 Acquisition of National Processing Company1.3.2 FleetBoston Financial merger1.3.3 Purchase of MBNA1.3.4 Divestiture of Brazil operations1.3.5 Plans to acquire LaSalle Bank2 Bank of America today2.1 Consumer2.2 Corporate2.3 Investment Management2.4 Social responsibility3 Controversy and criticism4 International operations5 Bank of America corporate buildings6 Diversity7 Major sponsorships7.1 Official bank of8 References9 See also10 External links//[edit] Corporate historyIt has been suggested that NationsBank be merged into this article or section. (Discuss)Before 1993, the Bank of America that exists today was known as NationsBank, based in Charlotte, NC. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name.[edit] Pre-1998 history[edit] Bank of ItalyThe roots of the pre-1998 Bank of America lie in the American Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904. 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. Thus, unlike many other banks, he retained the confidence of the depositors and also had money to loan to those struck by the disaster.In the late 1920s, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bank of America, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bank of America. The combined company was headed by Giannini with Monnette serving as co-Chair.While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bank of America was the only NT&SA in the country. Thanks to good management, but also to aggressive development of the branch banking concept, the bank was soon the largest in California.[edit] Growth in CaliforniaGiannini also 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. Bank of America NT&SA also had banking relationships in international financial markets. Largely out of fear that Giannini would succeed in his efforts to create a nationwide bank, federal legislation prohibited banks from accepting deposits in states where they were not headquartered. This led to the creation of the bank holding company which could own a separate bank in each state.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 of 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 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside of California.California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during World War II), resulting in Bank of America being swamped by checks. By 1949 , the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally credited, together with General Electric and SRI International, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank invented the bank credit card, the BankAmericard, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.[edit] Expansion outside of CaliforniaBank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.Following 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 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then 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 (which had originated from banks once owned by BankAmerica), 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. On the day of the 1987 stock market crash, BankAmerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.[citation needed]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 (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because 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 that had brought down 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 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 and NationsBank executed a merger-of-equals and changed the headquarters to Charlotte, North Carolina.[edit] Merger of NationsBank and BankAmericaIn 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
posted by vishal @ 1:00 PM 0 Comments
finance - banking
financeThe Best European PerformersThere are no flavor-of-the-month outfits or dot-com hangers-on in the European BusinessWeek 50. Only companies whose managers know how to earn money in good times and bad make the grade.Name an economic malady and Europe has it in abundance right now: sluggish economic growth, lackluster consumer spending, currency swings that hurt exports, and depressed stock markets. For that reason, BusinessWeek could not have picked a better time to launch its first annual ranking of Europe's 50 best-performing companies. You won't find any frothy flavor-of-the-month outfits or dot-com hangers-on among these stalwarts. The BW Europe 50 is instead studded with companies whose managers know how to make money in good times and bad. What do corporations such as British bank HBOS (No. 1), Belgian utility Electrabel (No. 4), and Swedish apparel retailer H&M Hennes & Mauritz (No. 8) have in common? All have made singular progress in boosting sales, increasing profits, and delivering superior returns to investors in these worst of times for much of Europe. "Such top performers excel mainly because of good management that knows what to do in a difficult environment," says Robert Parkes, a European analyst at HSBC Bank in London. "They're doing well because they've kept in touch with what their customers and shareholders want."Most of the companies that powered to the top of this inaugural list are top-notch names with the size, stamina, and savvy needed to thrive in turbulent times. Energy companies like Total and financial-services companies such as Royal Bank of Scotland Group figure prominently. So do retail and consumer-staple giants such as France's Carrefour and Switzerland's Nestlé. Notable by their absence are Europe's big technology and telecom companies. Only three made it onto our top 50 list: France's Bouygues, Italy's Telecom Italia Mobile, and Finland's Nokia. Absent from the top 50 are powerhouses such as Germany's SAP, Geneva-based STMicroelectronics, and France's Alcatel. Blame the poor tech showing on three years of weak revenue growth, poor profitability, and, most of all, sagging stock market valuations.As investors know all too well, companies can manage impressive profits one year, only to disappoint the next. That's why the BW Europe 50 rewards those with staying power. To generate our ranking we used a series of criteria that judge the performance of the companies in the Standard & Poor's Europe 350 stock index over both one and three years.The turmoil in the markets over the past year means that today's darling can become tomorrow's dog almost overnight. That's why it's important not to see the BW Europe ranking as an all-knowing investment guide. Even stellar performers have their ups and downs from year to year. Take German pharmaceutical firm Altana and Spanish construction and engineering company Grupo Dragados. They beat all comers with total returns of 160.2% and 140.6%, respectively, between June 30, 2000, and June 30, 2003. However, both companies have delivered lower returns in recent months and neither Altana nor Grupo Dragados would appear in the top 50 if the ranking was based simply on the returns generated over the past 12 months.There's a definite British tilt in the European BW 50: British enterprises dominate, accounting for 17 of the 50 and 6 of the top 10. In part, that's because Britain has the most publicly traded companies of any European nation. That automatically increases the odds for British companies. Other elements are at work, though: The British economy has outperformed the 12-member euro zone in each of the past three years, and British companies have benefited from more buoyant domestic demand. France and Spain are also well represented. By contrast, although the German economy is the biggest in Europe by far, there isn't a single German company among the top 20. "Many German companies, such as car manufacturers, are well managed," says Paul Strebel, a professor at the IMD-International Institute for Management Development in Lausanne, Switzerland. "But the environment is more difficult there in terms of the macro background and structural rigidities."What's the secret of Anglo-Saxon corporate prowess? British companies operate in a freer environment than many of their Continental competitors. They do not suffer from the same labor restrictions, heavy social-security burden, and other structural impediments that hold back enterprises in many countries. It would have been much more difficult for HBOS, Royal Bank of Scotland Group, and HSBC Holdings to cut costs and exploit synergies as aggressively as they have done over the past three years if they had been headquartered in Germany rather than Britain. Yet structural reforms now wending their way through the German parliament may give Teutonic companies a competitive jolt. Also, notable absentees from this year's list, such as Deutsche Bank, could well make it next year, thanks to their belated cost-cutting efforts.The European BW 50 also provides proof that, despite the long-standing argument over whether mergers generate shareholder value, they can and do create powerful, successful companies. HBOS and Royal Bank of Scotland, the two top-performing banks on the list, both British, prove the point. HBOS, which heads the overall ranking, was created in 2001 when Bank of Scotland joined forces with Halifax PLC, a mortgage specialist. A year earlier, Royal Bank of Scotland, No.3 on our list, acquired National Westminster Bank PLC. The merged entities now not only outrank British arch-rivals HSBC (No. 48) and Barclays PLC (No. 52), but also every bank on the Continent. "We have the financial strength and flexibility needed to sustain growth and manage risk in an uncertain world," says HBOS Chief Executive James Crosby. "Our merger continues to exceed expectations."Meanwhile, ongoing consolidation within the global pharmaceutical industry has produced some of Europe's biggest mergers. The 1999 union of Sweden's Astra and Britain's Zeneca gave birth to Europe's third-largest drug company -- and No.35 on our list. A year later, rival British drugmakers GlaxoWellcome and Smith-Kline Beecham joined forces, to form the global No. 2, behind Pfizer of the U.S.With a market value of 105 billion euros, GlaxoSmithKline PLC also ranks No.2 in the BW Europe 50. Glaxo boosted net income 27% last year to produce an astounding 62% return on equity in 2002. Despite shareholder criticism of the size of senior executive pay-packages, CEO Jean-Pierre Garnier told shareholders in May that the group's "effective cost control" and "promising early-stage R&D pipeline" give it an edge over its competitors.One of the most striking things about the BW Europe 50 is the presence of so many energy and utility companies. In all, there are 13 producers, refiners, and distributors of oil, natural gas, and electricity. Some want to extract the energy and avoid the costly business of selling the end product. Oil giant Total, for example, is making a major bet on finding new acreage. "We are benefiting from a very clear long-term strategy of giving priority to the upstream," said Christophe de Margerie, president of exploration and production.Total benefited from a rise in world oil prices, but those companies in power generation and distribution had to combat three years of stalled demand for power by consumers and companies. Plus, privatization, deregulation, and mounting competition have limited the ability of these companies to push through rate hikes. To make matters worse, many European energy outfits temporarily fell out of favor with investors following the collapse of Enron Corp. in 2001 on the other side of the Atlantic.Despite the tough odds, European power producers such as Belgium's Electrabel (No. 4) and Italy's ENI (No. 28) managed to assert themselves. Both have a commanding presence in their domestic markets. And, as a result of collapsing borders and deregulation, they have been able to push deep into markets elsewhere in the European Union. Electrabel has made significant breakthroughs into France, Italy, and Spain, and now chalks up 37% of its sales abroad. All told, Electrabel increased sales by 18% over the past year. Its success sends an important message to the rest of Europe: Companies that exploit opportunities stemming from deregulation and the single currency are poised to excel.Then there's retail. Stagnant economies and rising joblessness have caused consumers in many parts of the Old World to pull in their horns. At the same time, fierce competition and deflationary pressures have forced down prices for many goods. That's hardly an optimal climate for retail chains. Yet seven retailers of one sort or another made it into the European BW 50. British supermarket operator Tesco PLC (No. 10) shows that grocers can sparkle even in tough markets. The group, headquartered in Hertfordshire, England, spent 300 million euros last year in a successful bid to wrest market share from rivals such as J. Sainsbury PLC, slashing prices and opening 62 new stores in Britain. Whereas many retailers saw profits plunge, Tesco's surged 14% in 2002. Tesco also runs the world's most successful online supermarket, which it is now replicating from Korea to Central Europe to the U.S., via a partnership with its American peer, Safeway.Giving customers what they want at a reasonable price is also paying big dividends at Swedish apparel retailer H&M Hennes & Mauritz (No. 8). The chain has 893 stores in 17 countries and plans to open another 110 this year, including 20 in the U.S. "We've halved the time it takes to open new stores, to an average of four to five weeks," says CEO Rolf Eriksen. "This doesn't reduce start-up costs, but it does help accelerate sales."H&M has long been an investor favorite. On the flip side, companies that investors shunned just 12 months ago are back in favor. France Télécom, for example, generated a jaw-dropping 161.6% shareholder return over the past year, thanks to the appointment of turnaround whiz Thierry Breton as CEO and investor enthusiasm for his plan to slash the company's massive debt load and trim operating expenses. Despite its improved outlook, though, France Télécom didn't make it into the top 50 because its performance in the previous two years was so dire. The same goes for other telcos such as Deutsche Telekom and Britain's BT Group, which are rebounding but still dealing with post-boom excesses.Despite their strengths, many of the companies in the BW Europe 50 face new challenges. Although there are some signs that the euro- zone economy is finally beginning to recover, consumers are still reluctant to splurge on big-ticket items. According to the European Automobile Manufacturers' Assn., European car sales were down 2.6% in unit terms during the first six months of 2003. Notwithstanding cheap financing deals and special offers, demand for autos could drop further in the coming months. Innovation, expansion into new markets, and deft control over manufacturing will set the winners apart from the losers, and likely continue to benefit the four carmakers on our list: France's PSA Peugeot Citroën (No. 15), Renault (No. 19), Germany's BMW (No. 21), and Porsche (No. 27).Luxury carmakers Porsche and BMW are expected to boost revenues and outmaneuver rivals, even in the stagnant Western European market. As the U.S. and European car markets went into a tailspin, Porsche moved quickly to trim production of its classic 911 and Boxster models. It also introduced the Cayenne, a racy new sport-utility vehicle that is powering sales and more than offsetting the decline in sportscar sales. The Stuttgart-based carmaker has returned 39% in value to shareholders over the past three years.It does help that global consumers have demonstrated a willingness to spend more of their income on luxury cars. The premium auto segment is growing at nearly twice the annual clip of the mass market. "The outlook for German luxury brands in the U.S. is extremely bright in sedans and SUVs," says Stephen B. Cheetham, auto analyst at Sanford C. Bernstein & Co.Meanwhile, the strong euro is giving headaches to many European companies -- and that could eventually include the luxury carmakers. Most vulnerable are exporters and those with large dollar revenues. If, as some currency traders predict, the euro hits $1.25 by year end, BMW, Carrefour, Sanofi-Synthélabo, and other companies with large sales outside the euro zone could see their revenues crimped.Yet for every euro loser there will be a euro winner. Companies that source a large portion of their products outside Europe stand to gain, as wages and other production costs decline when measured in euros. H&M's Eriksen says his company has already reaped some benefits. "As the euro strengthens," he says, "so does our purchasing power. That enables us to pass on those gains to consumers through lower prices."Falling interest rates could also spell relief for European businesses. With the benchmark European Central Bank rate at 2%, interest rates for most companies in the euro zone are at their lowest level in a generation. And the consensus among economists is that the ECB will cut rates again before the end of the year. On the Continent, cheap money is changing the dynamics of corporate performance. For starters, it makes it easier for heavily indebted enterprises to refinance themselves, which is one reason why many telcos have been able to stage a recovery in recent months.The biggest impact of low interest rates could be to underpin the recovery of the equity markets and create an environment in which managers are once again willing to assume big capital-market risks, such as mergers and acquisitions.The process has already started. In June, Italy's Banca Generali acquired compatriot Banca Privamera for 50 million euros in cash and 202 million euros in shares. A return to the go-go days of the late 1990s is probably still a long way off, however. And despite all the uncertainties about the euro, interest rates, and the economy, the European companies that are likely to thrive over the next year will be the ones that can do what the winners have done over the past three years: cut costs, widen margins, develop a more intimate and lucrative relationship with customers, and generate more profits.By David Fairlamb, with Jack Ewing and Gail Edmondson in Frankfurt, Kerry Capell and Stanley Reed in London, and Andy Reinhardt in Paris, and Frederick F. Jespersen in New YorkGet BusinessWeek directly on your desktop with our RSS feeds.Add BusinessWeek news to your Web site with our headline feed.Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.To subscribe online to BusinessWeek magazine, please click here.Learn more, go to the BusinessWeekOnline home page# posted by brijesh agarwal @ 10:19 PM 0 Comments banks-financeThursday, July 12, 2007Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world.[3][4] Bank of America is the largest American company (by market capitalization) that is not part of the Dow Jones Industrial Average. On July 19, 2006, Bank of America reported second quarter 2006 net income of $5.48 billion,[5] surpassing that of Citigroup for the first time.Contents[hide]1 Corporate history1.1 Pre-1998 history1.1.1 Bank of Italy1.1.2 Growth in California1.1.3 Expansion outside of California1.2 Merger of NationsBank and BankAmerica1.3 History since 19981.3.1 Acquisition of National Processing Company1.3.2 FleetBoston Financial merger1.3.3 Purchase of MBNA1.3.4 Divestiture of Brazil operations1.3.5 Plans to acquire LaSalle Bank2 Bank of America today2.1 Consumer2.2 Corporate2.3 Investment Management2.4 Social responsibility3 Controversy and criticism4 International operations5 Bank of America corporate buildings6 Diversity7 Major sponsorships7.1 Official bank of8 References9 See also10 External links//[edit] Corporate historyIt has been suggested that NationsBank be merged into this article or section. (Discuss)Before 1993, the Bank of America that exists today was known as NationsBank, based in Charlotte, NC. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name.[edit] Pre-1998 history[edit] Bank of ItalyThe roots of the pre-1998 Bank of America lie in the American Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904. 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. Thus, unlike many other banks, he retained the confidence of the depositors and also had money to loan to those struck by the disaster.In the late 1920s, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bank of America, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bank of America. The combined company was headed by Giannini with Monnette serving as co-Chair.While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bank of America was the only NT&SA in the country. Thanks to good management, but also to aggressive development of the branch banking concept, the bank was soon the largest in California.[edit] Growth in CaliforniaGiannini also 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. Bank of America NT&SA also had banking relationships in international financial markets. Largely out of fear that Giannini would succeed in his efforts to create a nationwide bank, federal legislation prohibited banks from accepting deposits in states where they were not headquartered. This led to the creation of the bank holding company which could own a separate bank in each state.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 of 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 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside of California.California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during World War II), resulting in Bank of America being swamped by checks. By 1949 , the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally credited, together with General Electric and SRI International, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank invented the bank credit card, the BankAmericard, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.[edit] Expansion outside of CaliforniaBank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.Following 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 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then 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 (which had originated from banks once owned by BankAmerica), 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. On the day of the 1987 stock market crash, BankAmerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.[citation needed]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 (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because 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 that had brought down 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 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 and NationsBank executed a merger-of-equals and changed the headquarters to Charlotte, North Carolina.[edit] Merger of NationsBank and BankAmericaIn 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
posted by vishal @ 1:00 PM 0 Comments
finance - banking
financeThe Best European PerformersThere are no flavor-of-the-month outfits or dot-com hangers-on in the European BusinessWeek 50. Only companies whose managers know how to earn money in good times and bad make the grade.Name an economic malady and Europe has it in abundance right now: sluggish economic growth, lackluster consumer spending, currency swings that hurt exports, and depressed stock markets. For that reason, BusinessWeek could not have picked a better time to launch its first annual ranking of Europe's 50 best-performing companies. You won't find any frothy flavor-of-the-month outfits or dot-com hangers-on among these stalwarts. The BW Europe 50 is instead studded with companies whose managers know how to make money in good times and bad. What do corporations such as British bank HBOS (No. 1), Belgian utility Electrabel (No. 4), and Swedish apparel retailer H&M Hennes & Mauritz (No. 8) have in common? All have made singular progress in boosting sales, increasing profits, and delivering superior returns to investors in these worst of times for much of Europe. "Such top performers excel mainly because of good management that knows what to do in a difficult environment," says Robert Parkes, a European analyst at HSBC Bank in London. "They're doing well because they've kept in touch with what their customers and shareholders want."Most of the companies that powered to the top of this inaugural list are top-notch names with the size, stamina, and savvy needed to thrive in turbulent times. Energy companies like Total and financial-services companies such as Royal Bank of Scotland Group figure prominently. So do retail and consumer-staple giants such as France's Carrefour and Switzerland's Nestlé. Notable by their absence are Europe's big technology and telecom companies. Only three made it onto our top 50 list: France's Bouygues, Italy's Telecom Italia Mobile, and Finland's Nokia. Absent from the top 50 are powerhouses such as Germany's SAP, Geneva-based STMicroelectronics, and France's Alcatel. Blame the poor tech showing on three years of weak revenue growth, poor profitability, and, most of all, sagging stock market valuations.As investors know all too well, companies can manage impressive profits one year, only to disappoint the next. That's why the BW Europe 50 rewards those with staying power. To generate our ranking we used a series of criteria that judge the performance of the companies in the Standard & Poor's Europe 350 stock index over both one and three years.The turmoil in the markets over the past year means that today's darling can become tomorrow's dog almost overnight. That's why it's important not to see the BW Europe ranking as an all-knowing investment guide. Even stellar performers have their ups and downs from year to year. Take German pharmaceutical firm Altana and Spanish construction and engineering company Grupo Dragados. They beat all comers with total returns of 160.2% and 140.6%, respectively, between June 30, 2000, and June 30, 2003. However, both companies have delivered lower returns in recent months and neither Altana nor Grupo Dragados would appear in the top 50 if the ranking was based simply on the returns generated over the past 12 months.There's a definite British tilt in the European BW 50: British enterprises dominate, accounting for 17 of the 50 and 6 of the top 10. In part, that's because Britain has the most publicly traded companies of any European nation. That automatically increases the odds for British companies. Other elements are at work, though: The British economy has outperformed the 12-member euro zone in each of the past three years, and British companies have benefited from more buoyant domestic demand. France and Spain are also well represented. By contrast, although the German economy is the biggest in Europe by far, there isn't a single German company among the top 20. "Many German companies, such as car manufacturers, are well managed," says Paul Strebel, a professor at the IMD-International Institute for Management Development in Lausanne, Switzerland. "But the environment is more difficult there in terms of the macro background and structural rigidities."What's the secret of Anglo-Saxon corporate prowess? British companies operate in a freer environment than many of their Continental competitors. They do not suffer from the same labor restrictions, heavy social-security burden, and other structural impediments that hold back enterprises in many countries. It would have been much more difficult for HBOS, Royal Bank of Scotland Group, and HSBC Holdings to cut costs and exploit synergies as aggressively as they have done over the past three years if they had been headquartered in Germany rather than Britain. Yet structural reforms now wending their way through the German parliament may give Teutonic companies a competitive jolt. Also, notable absentees from this year's list, such as Deutsche Bank, could well make it next year, thanks to their belated cost-cutting efforts.The European BW 50 also provides proof that, despite the long-standing argument over whether mergers generate shareholder value, they can and do create powerful, successful companies. HBOS and Royal Bank of Scotland, the two top-performing banks on the list, both British, prove the point. HBOS, which heads the overall ranking, was created in 2001 when Bank of Scotland joined forces with Halifax PLC, a mortgage specialist. A year earlier, Royal Bank of Scotland, No.3 on our list, acquired National Westminster Bank PLC. The merged entities now not only outrank British arch-rivals HSBC (No. 48) and Barclays PLC (No. 52), but also every bank on the Continent. "We have the financial strength and flexibility needed to sustain growth and manage risk in an uncertain world," says HBOS Chief Executive James Crosby. "Our merger continues to exceed expectations."Meanwhile, ongoing consolidation within the global pharmaceutical industry has produced some of Europe's biggest mergers. The 1999 union of Sweden's Astra and Britain's Zeneca gave birth to Europe's third-largest drug company -- and No.35 on our list. A year later, rival British drugmakers GlaxoWellcome and Smith-Kline Beecham joined forces, to form the global No. 2, behind Pfizer of the U.S.With a market value of 105 billion euros, GlaxoSmithKline PLC also ranks No.2 in the BW Europe 50. Glaxo boosted net income 27% last year to produce an astounding 62% return on equity in 2002. Despite shareholder criticism of the size of senior executive pay-packages, CEO Jean-Pierre Garnier told shareholders in May that the group's "effective cost control" and "promising early-stage R&D pipeline" give it an edge over its competitors.One of the most striking things about the BW Europe 50 is the presence of so many energy and utility companies. In all, there are 13 producers, refiners, and distributors of oil, natural gas, and electricity. Some want to extract the energy and avoid the costly business of selling the end product. Oil giant Total, for example, is making a major bet on finding new acreage. "We are benefiting from a very clear long-term strategy of giving priority to the upstream," said Christophe de Margerie, president of exploration and production.Total benefited from a rise in world oil prices, but those companies in power generation and distribution had to combat three years of stalled demand for power by consumers and companies. Plus, privatization, deregulation, and mounting competition have limited the ability of these companies to push through rate hikes. To make matters worse, many European energy outfits temporarily fell out of favor with investors following the collapse of Enron Corp. in 2001 on the other side of the Atlantic.Despite the tough odds, European power producers such as Belgium's Electrabel (No. 4) and Italy's ENI (No. 28) managed to assert themselves. Both have a commanding presence in their domestic markets. And, as a result of collapsing borders and deregulation, they have been able to push deep into markets elsewhere in the European Union. Electrabel has made significant breakthroughs into France, Italy, and Spain, and now chalks up 37% of its sales abroad. All told, Electrabel increased sales by 18% over the past year. Its success sends an important message to the rest of Europe: Companies that exploit opportunities stemming from deregulation and the single currency are poised to excel.Then there's retail. Stagnant economies and rising joblessness have caused consumers in many parts of the Old World to pull in their horns. At the same time, fierce competition and deflationary pressures have forced down prices for many goods. That's hardly an optimal climate for retail chains. Yet seven retailers of one sort or another made it into the European BW 50. British supermarket operator Tesco PLC (No. 10) shows that grocers can sparkle even in tough markets. The group, headquartered in Hertfordshire, England, spent 300 million euros last year in a successful bid to wrest market share from rivals such as J. Sainsbury PLC, slashing prices and opening 62 new stores in Britain. Whereas many retailers saw profits plunge, Tesco's surged 14% in 2002. Tesco also runs the world's most successful online supermarket, which it is now replicating from Korea to Central Europe to the U.S., via a partnership with its American peer, Safeway.Giving customers what they want at a reasonable price is also paying big dividends at Swedish apparel retailer H&M Hennes & Mauritz (No. 8). The chain has 893 stores in 17 countries and plans to open another 110 this year, including 20 in the U.S. "We've halved the time it takes to open new stores, to an average of four to five weeks," says CEO Rolf Eriksen. "This doesn't reduce start-up costs, but it does help accelerate sales."H&M has long been an investor favorite. On the flip side, companies that investors shunned just 12 months ago are back in favor. France Télécom, for example, generated a jaw-dropping 161.6% shareholder return over the past year, thanks to the appointment of turnaround whiz Thierry Breton as CEO and investor enthusiasm for his plan to slash the company's massive debt load and trim operating expenses. Despite its improved outlook, though, France Télécom didn't make it into the top 50 because its performance in the previous two years was so dire. The same goes for other telcos such as Deutsche Telekom and Britain's BT Group, which are rebounding but still dealing with post-boom excesses.Despite their strengths, many of the companies in the BW Europe 50 face new challenges. Although there are some signs that the euro- zone economy is finally beginning to recover, consumers are still reluctant to splurge on big-ticket items. According to the European Automobile Manufacturers' Assn., European car sales were down 2.6% in unit terms during the first six months of 2003. Notwithstanding cheap financing deals and special offers, demand for autos could drop further in the coming months. Innovation, expansion into new markets, and deft control over manufacturing will set the winners apart from the losers, and likely continue to benefit the four carmakers on our list: France's PSA Peugeot Citroën (No. 15), Renault (No. 19), Germany's BMW (No. 21), and Porsche (No. 27).Luxury carmakers Porsche and BMW are expected to boost revenues and outmaneuver rivals, even in the stagnant Western European market. As the U.S. and European car markets went into a tailspin, Porsche moved quickly to trim production of its classic 911 and Boxster models. It also introduced the Cayenne, a racy new sport-utility vehicle that is powering sales and more than offsetting the decline in sportscar sales. The Stuttgart-based carmaker has returned 39% in value to shareholders over the past three years.It does help that global consumers have demonstrated a willingness to spend more of their income on luxury cars. The premium auto segment is growing at nearly twice the annual clip of the mass market. "The outlook for German luxury brands in the U.S. is extremely bright in sedans and SUVs," says Stephen B. Cheetham, auto analyst at Sanford C. Bernstein & Co.Meanwhile, the strong euro is giving headaches to many European companies -- and that could eventually include the luxury carmakers. Most vulnerable are exporters and those with large dollar revenues. If, as some currency traders predict, the euro hits $1.25 by year end, BMW, Carrefour, Sanofi-Synthélabo, and other companies with large sales outside the euro zone could see their revenues crimped.Yet for every euro loser there will be a euro winner. Companies that source a large portion of their products outside Europe stand to gain, as wages and other production costs decline when measured in euros. H&M's Eriksen says his company has already reaped some benefits. "As the euro strengthens," he says, "so does our purchasing power. That enables us to pass on those gains to consumers through lower prices."Falling interest rates could also spell relief for European businesses. With the benchmark European Central Bank rate at 2%, interest rates for most companies in the euro zone are at their lowest level in a generation. And the consensus among economists is that the ECB will cut rates again before the end of the year. On the Continent, cheap money is changing the dynamics of corporate performance. For starters, it makes it easier for heavily indebted enterprises to refinance themselves, which is one reason why many telcos have been able to stage a recovery in recent months.The biggest impact of low interest rates could be to underpin the recovery of the equity markets and create an environment in which managers are once again willing to assume big capital-market risks, such as mergers and acquisitions.The process has already started. In June, Italy's Banca Generali acquired compatriot Banca Privamera for 50 million euros in cash and 202 million euros in shares. A return to the go-go days of the late 1990s is probably still a long way off, however. And despite all the uncertainties about the euro, interest rates, and the economy, the European companies that are likely to thrive over the next year will be the ones that can do what the winners have done over the past three years: cut costs, widen margins, develop a more intimate and lucrative relationship with customers, and generate more profits.By David Fairlamb, with Jack Ewing and Gail Edmondson in Frankfurt, Kerry Capell and Stanley Reed in London, and Andy Reinhardt in Paris, and Frederick F. Jespersen in New YorkGet BusinessWeek directly on your desktop with our RSS feeds.Add BusinessWeek news to your Web site with our headline feed.Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.To subscribe online to BusinessWeek magazine, please click here.Learn more, go to the BusinessWeekOnline home page# posted by brijesh agarwal @ 10:19 PM 0 Comments banks-financeThursday, July 12, 2007Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world.[3][4] Bank of America is the largest American company (by market capitalization) that is not part of the Dow Jones Industrial Average. On July 19, 2006, Bank of America reported second quarter 2006 net income of $5.48 billion,[5] surpassing that of Citigroup for the first time.Contents[hide]1 Corporate history1.1 Pre-1998 history1.1.1 Bank of Italy1.1.2 Growth in California1.1.3 Expansion outside of California1.2 Merger of NationsBank and BankAmerica1.3 History since 19981.3.1 Acquisition of National Processing Company1.3.2 FleetBoston Financial merger1.3.3 Purchase of MBNA1.3.4 Divestiture of Brazil operations1.3.5 Plans to acquire LaSalle Bank2 Bank of America today2.1 Consumer2.2 Corporate2.3 Investment Management2.4 Social responsibility3 Controversy and criticism4 International operations5 Bank of America corporate buildings6 Diversity7 Major sponsorships7.1 Official bank of8 References9 See also10 External links//[edit] Corporate historyIt has been suggested that NationsBank be merged into this article or section. (Discuss)Before 1993, the Bank of America that exists today was known as NationsBank, based in Charlotte, NC. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name.[edit] Pre-1998 history[edit] Bank of ItalyThe roots of the pre-1998 Bank of America lie in the American Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904. 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. Thus, unlike many other banks, he retained the confidence of the depositors and also had money to loan to those struck by the disaster.In the late 1920s, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bank of America, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bank of America. The combined company was headed by Giannini with Monnette serving as co-Chair.While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bank of America was the only NT&SA in the country. Thanks to good management, but also to aggressive development of the branch banking concept, the bank was soon the largest in California.[edit] Growth in CaliforniaGiannini also 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. Bank of America NT&SA also had banking relationships in international financial markets. Largely out of fear that Giannini would succeed in his efforts to create a nationwide bank, federal legislation prohibited banks from accepting deposits in states where they were not headquartered. This led to the creation of the bank holding company which could own a separate bank in each state.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 of 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 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside of California.California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during World War II), resulting in Bank of America being swamped by checks. By 1949 , the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally credited, together with General Electric and SRI International, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank invented the bank credit card, the BankAmericard, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.[edit] Expansion outside of CaliforniaBank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.Following 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 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then 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 (which had originated from banks once owned by BankAmerica), 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. On the day of the 1987 stock market crash, BankAmerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.[citation needed]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 (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because 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 that had brought down 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 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 and NationsBank executed a merger-of-equals and changed the headquarters to Charlotte, North Carolina.[edit] Merger of NationsBank and BankAmericaIn 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
posted by vishal @ 1:00 PM 0 Comments
finance - banking
financeThe Best European PerformersThere are no flavor-of-the-month outfits or dot-com hangers-on in the European BusinessWeek 50. Only companies whose managers know how to earn money in good times and bad make the grade.Name an economic malady and Europe has it in abundance right now: sluggish economic growth, lackluster consumer spending, currency swings that hurt exports, and depressed stock markets. For that reason, BusinessWeek could not have picked a better time to launch its first annual ranking of Europe's 50 best-performing companies. You won't find any frothy flavor-of-the-month outfits or dot-com hangers-on among these stalwarts. The BW Europe 50 is instead studded with companies whose managers know how to make money in good times and bad. What do corporations such as British bank HBOS (No. 1), Belgian utility Electrabel (No. 4), and Swedish apparel retailer H&M Hennes & Mauritz (No. 8) have in common? All have made singular progress in boosting sales, increasing profits, and delivering superior returns to investors in these worst of times for much of Europe. "Such top performers excel mainly because of good management that knows what to do in a difficult environment," says Robert Parkes, a European analyst at HSBC Bank in London. "They're doing well because they've kept in touch with what their customers and shareholders want."Most of the companies that powered to the top of this inaugural list are top-notch names with the size, stamina, and savvy needed to thrive in turbulent times. Energy companies like Total and financial-services companies such as Royal Bank of Scotland Group figure prominently. So do retail and consumer-staple giants such as France's Carrefour and Switzerland's Nestlé. Notable by their absence are Europe's big technology and telecom companies. Only three made it onto our top 50 list: France's Bouygues, Italy's Telecom Italia Mobile, and Finland's Nokia. Absent from the top 50 are powerhouses such as Germany's SAP, Geneva-based STMicroelectronics, and France's Alcatel. Blame the poor tech showing on three years of weak revenue growth, poor profitability, and, most of all, sagging stock market valuations.As investors know all too well, companies can manage impressive profits one year, only to disappoint the next. That's why the BW Europe 50 rewards those with staying power. To generate our ranking we used a series of criteria that judge the performance of the companies in the Standard & Poor's Europe 350 stock index over both one and three years.The turmoil in the markets over the past year means that today's darling can become tomorrow's dog almost overnight. That's why it's important not to see the BW Europe ranking as an all-knowing investment guide. Even stellar performers have their ups and downs from year to year. Take German pharmaceutical firm Altana and Spanish construction and engineering company Grupo Dragados. They beat all comers with total returns of 160.2% and 140.6%, respectively, between June 30, 2000, and June 30, 2003. However, both companies have delivered lower returns in recent months and neither Altana nor Grupo Dragados would appear in the top 50 if the ranking was based simply on the returns generated over the past 12 months.There's a definite British tilt in the European BW 50: British enterprises dominate, accounting for 17 of the 50 and 6 of the top 10. In part, that's because Britain has the most publicly traded companies of any European nation. That automatically increases the odds for British companies. Other elements are at work, though: The British economy has outperformed the 12-member euro zone in each of the past three years, and British companies have benefited from more buoyant domestic demand. France and Spain are also well represented. By contrast, although the German economy is the biggest in Europe by far, there isn't a single German company among the top 20. "Many German companies, such as car manufacturers, are well managed," says Paul Strebel, a professor at the IMD-International Institute for Management Development in Lausanne, Switzerland. "But the environment is more difficult there in terms of the macro background and structural rigidities."What's the secret of Anglo-Saxon corporate prowess? British companies operate in a freer environment than many of their Continental competitors. They do not suffer from the same labor restrictions, heavy social-security burden, and other structural impediments that hold back enterprises in many countries. It would have been much more difficult for HBOS, Royal Bank of Scotland Group, and HSBC Holdings to cut costs and exploit synergies as aggressively as they have done over the past three years if they had been headquartered in Germany rather than Britain. Yet structural reforms now wending their way through the German parliament may give Teutonic companies a competitive jolt. Also, notable absentees from this year's list, such as Deutsche Bank, could well make it next year, thanks to their belated cost-cutting efforts.The European BW 50 also provides proof that, despite the long-standing argument over whether mergers generate shareholder value, they can and do create powerful, successful companies. HBOS and Royal Bank of Scotland, the two top-performing banks on the list, both British, prove the point. HBOS, which heads the overall ranking, was created in 2001 when Bank of Scotland joined forces with Halifax PLC, a mortgage specialist. A year earlier, Royal Bank of Scotland, No.3 on our list, acquired National Westminster Bank PLC. The merged entities now not only outrank British arch-rivals HSBC (No. 48) and Barclays PLC (No. 52), but also every bank on the Continent. "We have the financial strength and flexibility needed to sustain growth and manage risk in an uncertain world," says HBOS Chief Executive James Crosby. "Our merger continues to exceed expectations."Meanwhile, ongoing consolidation within the global pharmaceutical industry has produced some of Europe's biggest mergers. The 1999 union of Sweden's Astra and Britain's Zeneca gave birth to Europe's third-largest drug company -- and No.35 on our list. A year later, rival British drugmakers GlaxoWellcome and Smith-Kline Beecham joined forces, to form the global No. 2, behind Pfizer of the U.S.With a market value of 105 billion euros, GlaxoSmithKline PLC also ranks No.2 in the BW Europe 50. Glaxo boosted net income 27% last year to produce an astounding 62% return on equity in 2002. Despite shareholder criticism of the size of senior executive pay-packages, CEO Jean-Pierre Garnier told shareholders in May that the group's "effective cost control" and "promising early-stage R&D pipeline" give it an edge over its competitors.One of the most striking things about the BW Europe 50 is the presence of so many energy and utility companies. In all, there are 13 producers, refiners, and distributors of oil, natural gas, and electricity. Some want to extract the energy and avoid the costly business of selling the end product. Oil giant Total, for example, is making a major bet on finding new acreage. "We are benefiting from a very clear long-term strategy of giving priority to the upstream," said Christophe de Margerie, president of exploration and production.Total benefited from a rise in world oil prices, but those companies in power generation and distribution had to combat three years of stalled demand for power by consumers and companies. Plus, privatization, deregulation, and mounting competition have limited the ability of these companies to push through rate hikes. To make matters worse, many European energy outfits temporarily fell out of favor with investors following the collapse of Enron Corp. in 2001 on the other side of the Atlantic.Despite the tough odds, European power producers such as Belgium's Electrabel (No. 4) and Italy's ENI (No. 28) managed to assert themselves. Both have a commanding presence in their domestic markets. And, as a result of collapsing borders and deregulation, they have been able to push deep into markets elsewhere in the European Union. Electrabel has made significant breakthroughs into France, Italy, and Spain, and now chalks up 37% of its sales abroad. All told, Electrabel increased sales by 18% over the past year. Its success sends an important message to the rest of Europe: Companies that exploit opportunities stemming from deregulation and the single currency are poised to excel.Then there's retail. Stagnant economies and rising joblessness have caused consumers in many parts of the Old World to pull in their horns. At the same time, fierce competition and deflationary pressures have forced down prices for many goods. That's hardly an optimal climate for retail chains. Yet seven retailers of one sort or another made it into the European BW 50. British supermarket operator Tesco PLC (No. 10) shows that grocers can sparkle even in tough markets. The group, headquartered in Hertfordshire, England, spent 300 million euros last year in a successful bid to wrest market share from rivals such as J. Sainsbury PLC, slashing prices and opening 62 new stores in Britain. Whereas many retailers saw profits plunge, Tesco's surged 14% in 2002. Tesco also runs the world's most successful online supermarket, which it is now replicating from Korea to Central Europe to the U.S., via a partnership with its American peer, Safeway.Giving customers what they want at a reasonable price is also paying big dividends at Swedish apparel retailer H&M Hennes & Mauritz (No. 8). The chain has 893 stores in 17 countries and plans to open another 110 this year, including 20 in the U.S. "We've halved the time it takes to open new stores, to an average of four to five weeks," says CEO Rolf Eriksen. "This doesn't reduce start-up costs, but it does help accelerate sales."H&M has long been an investor favorite. On the flip side, companies that investors shunned just 12 months ago are back in favor. France Télécom, for example, generated a jaw-dropping 161.6% shareholder return over the past year, thanks to the appointment of turnaround whiz Thierry Breton as CEO and investor enthusiasm for his plan to slash the company's massive debt load and trim operating expenses. Despite its improved outlook, though, France Télécom didn't make it into the top 50 because its performance in the previous two years was so dire. The same goes for other telcos such as Deutsche Telekom and Britain's BT Group, which are rebounding but still dealing with post-boom excesses.Despite their strengths, many of the companies in the BW Europe 50 face new challenges. Although there are some signs that the euro- zone economy is finally beginning to recover, consumers are still reluctant to splurge on big-ticket items. According to the European Automobile Manufacturers' Assn., European car sales were down 2.6% in unit terms during the first six months of 2003. Notwithstanding cheap financing deals and special offers, demand for autos could drop further in the coming months. Innovation, expansion into new markets, and deft control over manufacturing will set the winners apart from the losers, and likely continue to benefit the four carmakers on our list: France's PSA Peugeot Citroën (No. 15), Renault (No. 19), Germany's BMW (No. 21), and Porsche (No. 27).Luxury carmakers Porsche and BMW are expected to boost revenues and outmaneuver rivals, even in the stagnant Western European market. As the U.S. and European car markets went into a tailspin, Porsche moved quickly to trim production of its classic 911 and Boxster models. It also introduced the Cayenne, a racy new sport-utility vehicle that is powering sales and more than offsetting the decline in sportscar sales. The Stuttgart-based carmaker has returned 39% in value to shareholders over the past three years.It does help that global consumers have demonstrated a willingness to spend more of their income on luxury cars. The premium auto segment is growing at nearly twice the annual clip of the mass market. "The outlook for German luxury brands in the U.S. is extremely bright in sedans and SUVs," says Stephen B. Cheetham, auto analyst at Sanford C. Bernstein & Co.Meanwhile, the strong euro is giving headaches to many European companies -- and that could eventually include the luxury carmakers. Most vulnerable are exporters and those with large dollar revenues. If, as some currency traders predict, the euro hits $1.25 by year end, BMW, Carrefour, Sanofi-Synthélabo, and other companies with large sales outside the euro zone could see their revenues crimped.Yet for every euro loser there will be a euro winner. Companies that source a large portion of their products outside Europe stand to gain, as wages and other production costs decline when measured in euros. H&M's Eriksen says his company has already reaped some benefits. "As the euro strengthens," he says, "so does our purchasing power. That enables us to pass on those gains to consumers through lower prices."Falling interest rates could also spell relief for European businesses. With the benchmark European Central Bank rate at 2%, interest rates for most companies in the euro zone are at their lowest level in a generation. And the consensus among economists is that the ECB will cut rates again before the end of the year. On the Continent, cheap money is changing the dynamics of corporate performance. For starters, it makes it easier for heavily indebted enterprises to refinance themselves, which is one reason why many telcos have been able to stage a recovery in recent months.The biggest impact of low interest rates could be to underpin the recovery of the equity markets and create an environment in which managers are once again willing to assume big capital-market risks, such as mergers and acquisitions.The process has already started. In June, Italy's Banca Generali acquired compatriot Banca Privamera for 50 million euros in cash and 202 million euros in shares. A return to the go-go days of the late 1990s is probably still a long way off, however. And despite all the uncertainties about the euro, interest rates, and the economy, the European companies that are likely to thrive over the next year will be the ones that can do what the winners have done over the past three years: cut costs, widen margins, develop a more intimate and lucrative relationship with customers, and generate more profits.By David Fairlamb, with Jack Ewing and Gail Edmondson in Frankfurt, Kerry Capell and Stanley Reed in London, and Andy Reinhardt in Paris, and Frederick F. Jespersen in New YorkGet BusinessWeek directly on your desktop with our RSS feeds.Add BusinessWeek news to your Web site with our headline feed.Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.To subscribe online to BusinessWeek magazine, please click here.Learn more, go to the BusinessWeekOnline home page# posted by brijesh agarwal @ 10:19 PM 0 Comments banks-financeThursday, July 12, 2007Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world.[3][4] Bank of America is the largest American company (by market capitalization) that is not part of the Dow Jones Industrial Average. On July 19, 2006, Bank of America reported second quarter 2006 net income of $5.48 billion,[5] surpassing that of Citigroup for the first time.Contents[hide]1 Corporate history1.1 Pre-1998 history1.1.1 Bank of Italy1.1.2 Growth in California1.1.3 Expansion outside of California1.2 Merger of NationsBank and BankAmerica1.3 History since 19981.3.1 Acquisition of National Processing Company1.3.2 FleetBoston Financial merger1.3.3 Purchase of MBNA1.3.4 Divestiture of Brazil operations1.3.5 Plans to acquire LaSalle Bank2 Bank of America today2.1 Consumer2.2 Corporate2.3 Investment Management2.4 Social responsibility3 Controversy and criticism4 International operations5 Bank of America corporate buildings6 Diversity7 Major sponsorships7.1 Official bank of8 References9 See also10 External links//[edit] Corporate historyIt has been suggested that NationsBank be merged into this article or section. (Discuss)Before 1993, the Bank of America that exists today was known as NationsBank, based in Charlotte, NC. In 1998, NationsBank merged with San Francisco-based BankAmerica and assumed the Bank of America name.[edit] Pre-1998 history[edit] Bank of ItalyThe roots of the pre-1998 Bank of America lie in the American Bank of Italy, founded in San Francisco by Amadeo Giannini in 1904. 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. Thus, unlike many other banks, he retained the confidence of the depositors and also had money to loan to those struck by the disaster.In the late 1920s, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bank of America, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bank of America. The combined company was headed by Giannini with Monnette serving as co-Chair.While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bank of America was the only NT&SA in the country. Thanks to good management, but also to aggressive development of the branch banking concept, the bank was soon the largest in California.[edit] Growth in CaliforniaGiannini also 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. Bank of America NT&SA also had banking relationships in international financial markets. Largely out of fear that Giannini would succeed in his efforts to create a nationwide bank, federal legislation prohibited banks from accepting deposits in states where they were not headquartered. This led to the creation of the bank holding company which could own a separate bank in each state.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 of 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 1980s with a change in federal banking legislation and regulation that Bank of America was again able to expand its domestic consumer banking activity outside of California.California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during World War II), resulting in Bank of America being swamped by checks. By 1949 , the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally credited, together with General Electric and SRI International, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.These technologies also enabled credit cards to be linked directly to individual bank accounts. In 1958, the bank invented the bank credit card, the BankAmericard, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with BankAmericard.[edit] Expansion outside of CaliforniaBank of America Corporate Center, located in the center of uptown Charlotte, North Carolina.Following 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 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The company fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then 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 (which had originated from banks once owned by BankAmerica), 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. On the day of the 1987 stock market crash, BankAmerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.[citation needed]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 (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because 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 that had brought down 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 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 and NationsBank executed a merger-of-equals and changed the headquarters to Charlotte, North Carolina.[edit] Merger of NationsBank and BankAmericaIn 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
posted by navjot singh at
8:05 PM
0 Comments
