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Large Cap Banks for 12-29-06


Large Cap Bank News


Speculation Mounts Over Deal by Bank of America for Barclays     WSJ 12-09
    A Merrill Lynch analyst revived speculation that Bank of America would make a bid for Britain's Barclays PLC, in a report that drove Bank of America's shares down 1.6% Friday and boosted Barclays's by 3.3% in London on top of a similar rally the day before. While a Bank of America-Barclays transaction has long been seen as a good fit and ultimately may happen -- Bank of America made an unsuccessful move to buy Barclays in 2003 -- people familiar with the banks said nothing is in the works for now.
    Barclays Chairman Matthew Barrett is retiring at the end of the year. Other anecdotal evidence includes the unexpected announcement that Bank of America Chief Financial Officer Alvaro G. de Molina planned to resign and Chief Executive Kenneth Lewis canceled a meeting Wednesday with institutional investors "due to an impromptu business trip."
    In an interview, Edward Najarian, a banking analyst at Merrill Lynch since 2000, said he had no "inside information that this is an imminent deal or that this is going to happen in a week or two or anything like that." He said that based on conversations with Bank of America's management team, he believes Barclays "is a deal strategically that BofA wants to do." But he added, "It may take a while, and we don't know if Barclays wants to sell or what price Barclays would command in order to sell."

Citigroup Shares Spike on Market Rumors     AP 12-08
    Citigroup Inc.'s shares rose to a multiyear high in trading on Friday amid market rumors that the nation's largest financial institution was considering selling off units. The bank declined comment on the breakup rumor -- as well as suggestions that Citigroup's popular chief financial officer, Sallie Krawcheck, planned to leave. One rumor had her being replaced by Al de Molina, who announced last week that he was leaving as Bank of America's CFO.
    In a research report published Friday, Lehman Brothers analyst Jason M. Goldberg said he expected Citigroup's performance to improve in 2007. "Things should get better as we believe operating leverage will progress, incremental investment spend will cease and its margin should perform better," Goldberg said. "Additionally, its U.S. consumer unit showed signs of life in the third quarter and its investment bank should put up much better numbers in the fourth quarter, aided by the environment."

Bank of New York and Mellon Agree to Merge     PRNewswire 12-04
    The Bank of New York Company and Mellon Financial Corporation announced today they have entered into a definitive agreement to merge, creating the largest securities servicing and asset management firm globally. Under the terms of the agreement, The Bank of New York's shareholders will receive 0.9434 shares in the new company for each share of The Bank of New York that they own and Mellon shareholders will receive one share in the new company for each Mellon share they own.


October Ratings Changes     On 10-20 Prudential Equity Group downgraded shares of BBT to underweight from neutral and lowered the company to $40 from $44 a share. "The company is more plain vanilla than some of its more diversified peers and therefore gets hurt from the continued flat yield curve, which is likely to contribute to still lower margin," Prudential analysts Michael Mayo and Hunter Murchison said in a note to clients. "We would rather invest in companies that benefit more from a higher stock market and better capital markets, notwithstanding our long-term favorable view of BB&T's CEO."


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