Bank Divestitures Continue

As we stated before, we anticipate that a number of the “Big Banks,” such as (but not limited to) Citigroup (C), Wells Fargo (WFC), Bank of America (BAC), JP Morgan (JPM) and US Bancorp (USB) may need to divest a number of non-core or overlap operations in order to preserve capital.

To that end, Bank of America announced its intent to sell its First Republic Bank operation, which it acquired through the acquisition of Merrill Lynch. Merrill had acquired First Republic in 2007.

First Republic is a private banking and wealth management company (offering personal banking, business banking, trust, brokerage and wealth management services) which specializes in personalized relationship-based services through its preferred banking or trust offices in 10 major metropolitan areas (San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, Las Vegas, Portland, Seattle, Boston, and New York City). We have been acquainted with the operations of First Republic Bank for a number of years and would consider this “white-shoe” type of operation a desirable addition for any franchise (unless it were to be spun out into a stand-alone entity).

We suspect that there was significant overlap, and Bank of America anticipated it could realize a greater portion of the intrinsic value of the First Republic operation by divesting it versus melding into its existing footprint.

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