Bank of America Sells First Republic Bank

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Bank of America will sell San Francisco-based First Republic Bank to two private equity groups. The deal is set to go through next year. Bloomberg has the details:

Bank of America Corp. said it agreed to sell First Republic Bank to a group led by private-equity firms General Atlantic LLC and Colony Capital LLC. The Wall Street Journal reported earlier today that the group will pay more than $1 billion, citing unidentified people familiar with the situation.

Bank of America, the biggest U.S. lender by assets, is selling businesses to raise capital after getting $45 billion in government rescue funds. Colony has invested more than $39 billion since its founding by billionaire Thomas Barrack in 1991. General Atlantic focuses on financial and technology companies.

Bank of America inherited First Republic when it bought Merrill Lynch & Co. in January. Merrill Lynch bought the bank, which had assets of $19 billion on Sept. 30, for $1.8 billion in 2007. First Republic serves affluent clients in California, Connecticut New York and Nevada.

Almost two years ago, soon-to-be-ex-CEO Ken Lewis said that as a big bank, “it’s your prerogative to use ‘retreat’ or ‘retrench” (as quoted from the New York Times). Looks like “retreat” is winning. The Wall Street Journal explains:

The long-expected sale of First Republic is the result of a review of Bank of America assets. The bank is working to bolster its capital ratios and shed any units that are no longer strategic fits. Last month it sold the long-term asset management business of Columbia Management to Ameriprise Financial Inc. for up to $1.2 billion.