Bank of America mulls scrapping sale of brokerage

Bank of America mulls scrapping sale of brokerage

Bank of America is considering scrapping the sale of its equities prime brokerage unit after receiving lukewarm interest from potential bidders, the Financial Times reported on its Website on Sunday.

Citing people close to the situation, the newspaper said no final decision on the prime brokerage unit, which has been up for sale for more than three months, had been made.

Competition for the prime brokerage unit, which is believed to have had revenue of more than $180 mln last year, weakened this month after JPMorgan Chase's & Co's cut-price acquisition of Bear Stearns Cos Inc, the FT said.

JPMorgan had been seen as an early front-runner for BofA's business but its need for a prime brokerage unit was filled by the purchase of Bear, which has a highly regarded and profitable prime brokerage unit, the report said.

British investment bank Barclays Capital and France's BNP Paribas SA are believed to retain an interest in BofA's business because of its strong presence in the U.S. market, the paper said.

People close to the situation said that the indicative offers tabled by potential bidders had not matched BofA's expectations, the paper added.

A Bank of America spokeswoman declined comment.

Prime brokers typically provide trading, lending, cash management and other services to hedge funds.

Bank of America said in January it would eliminate 650 corporate and investment banking jobs and sell its prime brokerage unit, as the second-largest U.S. bank retrenches in the face of difficult credit market conditions.

The bank's decision to sell its equities prime brokerage followed a review announced in October last year, when Chief Executive Kenneth Lewis said, "I've had all of the fun I can stand in investment banking."

At the time, the bank said it would trim operations in structured products such as mortgage and asset-backed securities and collateralized debt obligations, but that the job cuts would not affect its prime brokerage unit.

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