MERRILL LYNCH MAY BECOME BANK OF AMERICA'S PARENT FIRM TO CUT COSTS

Bank of America may merge its Merrill Lynch division into the parent firm to cut costs and complexity.
The potential move could occur as early as the fourth quarter, Merrill reported in an Aug. 2 filing with the Securities and Exchange Commission.

Such a merger would mean Bank of America, the nation's second-largest lender, would assume all of the brokerage's obligations, including its outstanding U.S. and foreign debt securities.

As of the second quarter, Merrill had approximately $62 billion in long-term debt, according to a CreditSights report.

A merger could mean the end of Merrill as a separate legal entity, but Bank of America is likely to keep the Merrill Lynch name on its investment banking and stock brokerage businesses, CreditSights said.

Merrill Lynch, which has absorbed BofA's securities unit, is now the most profitable business unit in Bank of America, according to CreditSights.

If regulators approve the change, Merrill would no longer be required to file separate regulatory disclosures.

Merrill's SEC filing said the possible merger is part of a streamlining effort in which Bank of America "intends to continue to reduce the number of its subsidiaries," partly "through intercompany mergers."

If carried out, the restructuring would come about five years after Bank of America agreed to buy Merrill in late 2008 during the peak of the financial crisis. The acquisition was completed in January 2009.

The CreditSights report said the potential merger appears to be driven by Bank of America's efficiency initiatives under CEO Brian Moynihan. "Less complex structures would increase the success of resolution planning" under the living wills major banks are required to file as part of the Dodd-Frank financial reform act, the report said.