Bank of America is struggling to digest its Jan 1 acquisition of Merrill Lynch & Co, the newspaper said, citing people familiar with the situation. -- PHOTO: ASSOCIATED PRESS
NEW YORK - THE US government is close to pledging billions of dollars of additional aid to Bank of America Corp, the Wall Street Journal reported on Wednesday, making the bank the second to require a second round of emergency government aid.
Bank of America is struggling to digest its Jan 1 acquisition of Merrill Lynch & Co, the newspaper said, citing people familiar with the situation. The bank's shares dropped more than 5 per cent after hours, reaching their lowest level since 1991.
Merrill Lynch's losses in the fourth quarter were larger than expected, which spurred Bank of America to start talking to the Treasury. The terms of the government aid are still being finalised, and details are expected to be announced with Bank of America's fourth-quarter earnings, due out Jan 20.
A possible deal would involve protecting Bank of America from Merrill's bad assets by capping the bank's potential losses from them.
Bank of America and Merrill Lynch together received $25 billion (S$37.34 billion) from the Treasury's Troubled Asset Relief programme in October. Citigroup received the same amount in October, and another $20 billion of capital in November.
Bank of America shares fell 5.9 per cent to $9.60 after closing at $10.20 on the New York Stock Exchange, down 4.2 per cent in the regular trading session. -- THOMSON REUTERS
