The Merrill takeover was completed on Thursday, ending more than 94 years of independence for the Wall Street investment bank and brokerage. The Wachovia merger closed on Wednesday, marking the denouement for a lender that started in 1879 with what it deemed a 'very adequate' US$100,000 (S$143,400) of capital.

Bank of America has said it would issue about 1.71 billion common shares to buy Merrill, equal to about US$24.1 billion, plus 359,100 preferred shares. The Wachovia merger valued that bank at roughly US$12.7 billion.

By adding Merrill, Bank of America vaulted over JPMorgan Chase & Co and Citigroup Inc to become the largest US bank by assets, with about US$2.7 trillion. Wells Fargo ranks fourth, with about US$1.4 trillion. Bank of America and Wells Fargo are also the largest US mortgage providers.

The mergers follow a year that saw several major US financial providers find buyers, fail, or adopt new business structures amid the biggest financial crisis in decades, prompting the US Treasury Department to craft the US$700 billion Troubled Asset Relief Programme to bail out the industry.

A year-long US recession has caused banks' credit problems to soar. Economists believe the US economy shrank as much as 6 per cent in the fourth quarter and could decline at least through June, and expect the unemployment rate to soar well above 8 per cent in 2009, up from November's 6.7 per cent.

Merrill and Wachovia together suffered more than US$48 billion of losses from January to September, largely because of writedowns tied to mortgages and other troubled debt.

Another big lender hurt by mortgage losses, Cleveland's National City Corp, was acquired on Wednesday by Pittsburgh-based PNC Financial Services Group Inc for about US$3.9 billion, based on reported common shares.

New challenge for Lewis
Mr Kenneth Lewis, chief executive of Charlotte, North Carolina-based Bank of America, had already spent some US$110 billion on major acquisitions before buying Merrill, but his latest purchase may pose his greatest challenge yet.

He must stem defections from Merrill's 'thundering herd' of 17,000 brokers and its investment bank, as he prepares to shed at least 30,000 jobs overall to help save US$7 billion a year.

This follows a year when Bank of America shares fell 65.9 per cent amid declining profitability, big exposure to the housing market and rising credit card delinquencies.

Adding Merrill makes the bank's brokerage, credit card, investment banking, mortgage and wealth management operations, plus its deposit base, the nation's largest or close to it.

'We are now uniquely positioned to win market share and expand our leadership position in markets around the world,' Mr Lewis said in a statement on Thursday.

While Bank of America and Merrill raised US$25 billion of capital from the Treasury programme, many analysts have said they may need more. Bank of America in October halved its dividend, and some analysts have said another cut may be needed.

Mr John Thain, who was Merrill's chief executive, agreed to run Bank of America's global banking, securities and wealth management businesses.

Assessing Wachovia's loan risks
In buying Wachovia, Wells Fargo trumped a lower bid by Citigroup, and more than doubled its size. Wells Fargo now has the nation's largest branch network, with more than 6,600 offices, and one of its largest deposit bases and brokerages.

Chief Executive John Stumpf is betting that San Francisco-based Wells Fargo properly assessed the risks in Wachovia's US$482.4 billion loan portfolio, including a troubled US$118.7 billion book of 'option' adjustable-rate mortgages.

'We're being very thoughtful and deliberate in our three-year merger integration,' Mr Stumpf said in a statement.

On Dec 10, Wells Fargo said it expected to write down US$71.4 billion of Wachovia's overall loan portfolio. The same day, Mr Stumpf said at a conference that the housing slump was not over but that there were 'early signs' a bottom might be near.

Wells Fargo is the nation's second-largest mortgage lender.

It remained profitable by avoiding many of the risky loans that plagued Wachovia and caused Washington Mutual Inc to fail.

Wells Fargo shares fell just 2.4 per cent in 2008.

Merrill's common shareholders received 0.8595 of a Bank of America share for each of their shares. Wachovia shareholders got 0.1991 of a Wells Fargo share for each of their shares. -- REUTERS