BankAmerica to Sell Stock-Transfer Unit
Bank of America plans to sell off a sizable securities-processing business, further evidence of a shakeout among providers of wholesale banking services.
Citing poor profitability and tough competition, the bank unit of BankAmerica Corp., San Francisco, signed a letter of intent to sell its stock-transfer business to Manufacturers Hanover Corp., New York, strengthening Hanover's position among the top five bank providers of this service.
The sale, which should be completed within 30 days, represents the biggest sale of a stock-transfer business in the past two years. The purchase price was not disclosed.
"We are committed to the stock-transfer business," said D'Arcy LeClaire, a managing director with Manufacturer's Geo-Serve unit, which handles the bank's wholesale services. "There is tremendous value in this business."
Bowing Out from Top 10
Bank of America was among the top 10 biggest bank providers of this service. Bank of America officials said excess capacity in the industry and insufficient volume of new customers made the business unattractive.
Even for banks still in the business, stock transfer yields low profits that requires continuous investment in technology. As a result, no banking business has experienced a faster or more extensive contraction than securities transfer.
In this business, banks perform the complex record-keeping and funds …