Bank of America And Barclays: Bad News

Print Email

Stocks:  (BAC)(C)(BCS)

Bank of America got a lot of press for passing Citigroup as the world’s largest bank based on market cap. Now, it wants to make the same mistakes that Citi has made: build a presence overseas and expand outside core franchises. While the market is calling to break Citi apart, B of A may be looking at buying British banking giant Barclays.

Barclays has a market value of $90 billion and Bank of America is over $200 million. Merrill Lynch believes that even if B of A pays over $100 billion, the purchae could add to earnings next year. Maybe.

Getting into investment and corporate banking is a dicey proposition, especially outside the US. If the market in private equity does not hold or if M&A activity slows or its the world’s stock markets meet the laws of gravity, $100 million could be a lot to pay.

Take a lesson from Citi. Stick to what you do well. Don’t get too big and complex.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.