Magazine article American Banker

Three Acquirers Confront Difficult Integration Jobs

Magazine article American Banker

Three Acquirers Confront Difficult Integration Jobs

Article excerpt

Byline: Paul Davis

Wednesday ended a tumultuous year for the financial sector and a trio of companies forced to sell themselves because of the credit crisis.

And the new year will pose challenges for those companies' buyers: Wells Fargo & Co., PNC Financial Services Group Inc., and Bank of America Corp. Wells' deal for Wachovia Corp. closed Wednesday, as did PNC's deal for National City Corp., and B of A's deal for Merrill Lynch & Co. Inc. was set to close Thursday. Analysts say that all three buyers will be tested right away as they seek to contain damage from risky mortgage bets and retain clients and that they expect at least one key executive from each of the acquired institutions to be on hand to ensure continuity through the integration process.

At Bank of America all eyes will be on Merrill Chairman and Chief Executive John Thain, who agreed to stay on and run the $1.83 trillion-asset Charlotte company's investment banking operations. Though B of A plans to slash more than 30,000 jobs over the next three years, Mr. Thain is one of several Merrill executives who will remain in roles that outsiders believe critical to keeping clients who are used to high-touch service. B of A must also continue Merrill's effort to reduce exposure to structured products such as collateralized debt obligations.

"B of A's modus operandi is to cut out a lot of costs ... which will create a different organization at Merrill," Gary Townsend, the CEO of Hill-Townsend Capital LLC, said in an interview Wednesday. B of A will also want to move more Merrill customers to its own high-net-worth platform, where Mr. Thain's leadership will be vital, Mr. Townsend said.

Though some observers have said that Mr. Thain might ultimately succeed Kenneth D. Lewis as chief executive, Nancy Bush of NAB Research LLC said the former Merrill CEO's long-term status at the company is unclear. …

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