Parmalat May Cost Bank of America $274m
Bank of America, which has become entangled in the accounting fraud at bankrupt Italian food group Parmalat, yesterday said its exposure to the firm totalled $274m (£152m). The bank triggered the bankruptcy of the company at the end of last year when it denied the existence of an...
Bank of America, which has become entangled in the accounting fraud at bankrupt Italian food group Parmalat, yesterday said its exposure to the firm totalled $274m (£152m).
The bank triggered the bankruptcy of the company at the end of last year when it denied the existence of an account that Parmalat had insisted held €4bn (£2.75bn) in cash.
The crisis at Parmalat again underlined the reasons behind the banking sector's rush to the consumer market, the motivation behind JP Morgan Chase's $58bn takeover of Bank One, which was announced on Wednesday night.
The strategy was further reinforced by a handful of results from the sector, including Bank of America, FleetBoston and Wachovia, which all reported higher fourth-quarter profits as consumer lending stayed strong.
Bank of America said its direct loans and credit to Parmalat totalled $244m, while derivative exposure was $30m. The firm, which alongside Citigroup was a lead banker for Parmalat, has sued the Italian business alleging it was the victim of fraud.
Investigators are examining the banks' roles in the deception that kept Parmalat afloat.
The combination of JP Morgan and Bank One is the latest in a wave of consolidation in the US banking industry, begun in October with the $47bn takeover of FleetBoston by Bank of America.
Other possible acquisition targets include SunTrust banks, National City, MBNA or PNC Financial Services.
JP Morgan will retain its position as the second largest banking group in the US, behind Citigroup, with $1.1trillion in assets after the merger with Bank One.
The combined group will operate under the JP Morgan name and be based in New York. About 10,000 jobs, or 7% of the combined workforce, will be cut.
There is little overlap between the two. Bank One, the sixth largest bank in the US with 1,800 branches, is strong in the south and mid-west while JP Morgan is focused in the north east.
The deal also solves the succession issue that has rankled some investors in JP Morgan. Bank One's James Dimon will take over as chief executive from William Harrison in 2006.
The merger is the third largest banking deal. In 1998 Travelers Group bought Citicorp for $70.2bn to create Citigroup and NationsBank bought BankAmerica for $59.2bn to create Bank of America.
Mr Harrison said the two banks had spoken informally of a possible deal "over the years" but negotiations had become serious in November.
The bank triggered the bankruptcy of the company at the end of last year when it denied the existence of an account that Parmalat had insisted held €4bn (£2.75bn) in cash.
The crisis at Parmalat again underlined the reasons behind the banking sector's rush to the consumer market, the motivation behind JP Morgan Chase's $58bn takeover of Bank One, which was announced on Wednesday night.
The strategy was further reinforced by a handful of results from the sector, including Bank of America, FleetBoston and Wachovia, which all reported higher fourth-quarter profits as consumer lending stayed strong.
Bank of America said its direct loans and credit to Parmalat totalled $244m, while derivative exposure was $30m. The firm, which alongside Citigroup was a lead banker for Parmalat, has sued the Italian business alleging it was the victim of fraud.
Investigators are examining the banks' roles in the deception that kept Parmalat afloat.
The combination of JP Morgan and Bank One is the latest in a wave of consolidation in the US banking industry, begun in October with the $47bn takeover of FleetBoston by Bank of America.
Other possible acquisition targets include SunTrust banks, National City, MBNA or PNC Financial Services.
JP Morgan will retain its position as the second largest banking group in the US, behind Citigroup, with $1.1trillion in assets after the merger with Bank One.
The combined group will operate under the JP Morgan name and be based in New York. About 10,000 jobs, or 7% of the combined workforce, will be cut.
There is little overlap between the two. Bank One, the sixth largest bank in the US with 1,800 branches, is strong in the south and mid-west while JP Morgan is focused in the north east.
The deal also solves the succession issue that has rankled some investors in JP Morgan. Bank One's James Dimon will take over as chief executive from William Harrison in 2006.
The merger is the third largest banking deal. In 1998 Travelers Group bought Citicorp for $70.2bn to create Citigroup and NationsBank bought BankAmerica for $59.2bn to create Bank of America.
Mr Harrison said the two banks had spoken informally of a possible deal "over the years" but negotiations had become serious in November.
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