Banking & Finance

Bank of America And Barclays: Bad News

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 He does not own securities in companies that he writes about.