Four years after it was acquired by Bank of America Corp., Merrill Lynch & Co. will no longer exist as a legal entity. The subsidiary company known for its experience of trading stocks on Main Street will be dissolved by the fourth quarter of this year.
BAC will retain the Merrill Lynch brand for its brokerage and investment bank as it takes on the subsidiary's obligations and debt.
As of the second quarter, Merill Lynch had a long-term debt of around USD62 billion. Since spreads were already converged with BAC, Merill Lynch's bonds will not be affected by the change. The former subsidiary does not have to file separate regulatory disclosures either since it will no longer exist as a legal entity.
BAC experienced controversies that included regulatory probes, investor lawsuits and criticism from lawmakers when it bought Merrill Lynch in 2009. But by merging the parent and subsidiary companies, it could help hit the USD8 billion a year cost cutting target spearheaded by Bank of America's CEO, Brian T. Moynihan. This move would further support the company to comply with banking regulations in case of a crisis.
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