BANK OF AMERICA
A Play for Wall Street
Tuesday, September 16, 2008
Kenneth D. Lewis, who buys banks for a living, rarely shows emotion on the days spent announcing purchases by his company, Bank of America.
Yesterday, announcing a deal to buy Merrill Lynch for $50 billion, he flickered only once, after an analyst asked about his company's ability to cut costs.
"We're good at this," he said with a touch of exasperation. "This isn't our first time."
Bank of America, which Lewis has run since 2001, has in recent years become the most comprehensive financial company in the United States, buying rivals including FleetBoston Financial, MBNA and Countrywide Financial. But the Charlotte company has struggled to attain the high profile to match its outsize profits.
With the deal for Merrill Lynch, Bank of America would become the nation's largest retail brokerage and a major player on Wall Street. It is already the nation's largest retail bank, the largest credit card issuer, the largest mortgage lender -- and in many cities across America, the largest presence on the skyline.
Bank of America was in a position to make the acquisition because, until now, it had not been active on Wall Street, where Merrill and other firms have been battered by severe troubles in mortgage-related securities. Instead, it set its sights on consumers, which gave it cash to go shopping for an investment bank.
The Merrill buyout also may close a chapter for Bank of America. Lewis said yesterday that he thought it might be his last deal. He turned 61 in April. He has spent $75 billion on deals in the past twelve months. He has now staked his legacy on his ability over the next few years to assemble from those pieces a single, highly profitable company.
"His swan song is going to be integrating and pulling together these businesses. If you can do that, then what do you do for an encore? Nothing," said Tony Plath, a finance professor at the University of North Carolina at Charlotte who has followed the company and Lewis over the years. "This will be his legacy."
Lewis grew up in Mississippi, then followed the well-worn road to Atlanta, where he worked to pay for tuition at Georgia State University. Later, he took a gamble, moving to Charlotte to take a job with North Carolina National Bank. Years later, Lewis would say that he considered the company a good fit because it had big ambitions. He would also say that he had always aspired to be in charge someday.
He climbed through the ranks as the bank exploded across state lines, building one of the first regional franchises. Under Hugh McColl, an ex-Marine, the bank bluffed and bullied its way past larger rivals to buy banks in Atlanta and Richmond and then in Texas and Florida.
And then, in 1998, it bought BankAmerica, the San Francisco bank that once had been the largest in America. That crown now belonged in Charlotte, and the company, then called NationsBank, took a new name to celebrate: Bank of America.
Lewis served McColl as a senior lieutenant, then succeeded him in 2001. McColl was brash, exuberant, pleased by the spotlight. Lewis is reserved, patient when necessary, efficient when speaking in public. His initial mandate was simple: The Marine had conquered an empire. Now it needed to be hammered and trimmed into a profitable business. For five years, Lewis focused single-mindedly on that task.