Bank of America to repay bailout

| December 3, 2009 | 0 Comments
Bank of America to repay bailout

Bank of America is to repay the $45 billion (£27 billion) of US Government bailout funds.

The banking giant received the funds at the height of the financial crisis after accepting the Troubled Asset Relief Program (TARP).

The repayment of the loan will see the bank escape curbs on executive pay, which in turn, has hindered its search for a new chief executive.

Outgoing chief executive, Ken Lewis, is to step down at the end of 2009. Lewis, who has worked at the firm for four decades, has faced criticism about his handling of the acquisition of investment bank Merrill Lynch - completed at the start of the year.

Meanwhile, the bank said it would use $26.2 billion in available cash and also sell $18.8 billion in securities to repay the debt.

The repayment of the loan has come much sooner than analysts had expected but it will free the bank from Government restrictions.

A spokesperson for the bank said the repayment of the loan “removes the stigma that we’ve had as a company. We become more attractive to a CEO candidate. Whether that means we get somebody external is impossible to say.”

In October the bank unveiled a $1 billion (£612 million) net loss for the third quarter - worse than the market had expected.

The figure compares with a net profit of $3.2 billion in the second quarter and $1.2 billion in the same period a year earlier.

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