Bank of America Corporation

150318181552-get-started-investing-780x439Bank of America Corporation is one of America’s biggest financial companies with headquarters at 100 North Tryon Street, Charlotte, North Carolina, United States. According to Wikipedia it is the largest bank holding company in the United States by assets and the second largest by market capitalization (1). This leading bank holding company is registered in the New York Stock Exchange as BAC, in the Tokyo Stock Exchange as 8648:JP; it is also listed in the Dow Jones Industry Average Index and the S&P 500 Index. As of 2009, BAC had disclosed the worth of their total assets as US $2.223 trillion with total revenue of US $150.45 billion. Aside from being one the leading bank holding company, it is involved in Financial and Investment services industry also.

The corporation has a strong history in the United States of America. It was founded 1928 when Amadeo Peter Giannini merged his Bank of Italy with Orra E. Monnette’s bank in Los Angeles. Hence the union of the two banks took the name “Bank of America” which was headed by Giannini and co-chaired by Orra E. Monnette. Throughout the 1950s and 1960s, the bank faced strict legislations that restricted its further expansion and diversification. In 1967, due to the Bank Holding Company Act, Giannini-Orra’s bank and all its subsidiaries were taken over by the newly formed BankAmerica Corporation. Bank America swiftly grew into one of the biggest Bank Holding Company in the United States; but due to heavy losses in 1997, the BankAmerica Corporation could not sustain its financial standing. Finally in the year 1998, the largest US bank holding company of the time NationsBank Corporation acquired the BankAmerica Corporation. This acquisition resulted in the renaming of NationsBank to Bank of America Corporation.

On January 1 2009, the BAC successfully closed the deal to purchase Merrill Lynch & Co., Inc. at approximately US $50 billion. Merrill Lynch & Co., Inc. was on the verge of bankruptcy before the merger and due to this reason the bank was hesitant throughout the process. According to an official statement, BAC tried to abandon the deal in December when the extent of losses of Merrill Lynch & Co., Inc. was fully disclosed, but the US government forced the bank to go through with the deal. This merger proved to be disastrous for the bank as was shown in the earnings released in January of 2009 which revealed huge losses for newly purchased Merrill Lynch & Co., Inc. These losses brought the market capitalization of Bank of America including Merrill Lynch & Co., Inc. down to a total of US $ 45 Billion. The BAC stock price tumbled to about US $ 7 which was recorded as the lowest stock price for the company in 17 years. This disastrous situation called for government intervention. On January 2009, the bank received a federal bailout package of over US $ 40 billion. This bailout money helped it in regaining its lost stature and in less than a year, the Bank of America erased its previous losses. On 9th of December 2009, it was officially announced the bailout money had been completely repaid back to the US federal government.

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Let the Lawsuits Begin – Banks Brace For a Storm of Litigation

fIn an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans. Olender wrote:

“The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

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Royal Entrepreneurship – The Case of Royal Bank Zimbabwe Ltd Formation

investingThe deregulation of the financial services in the late 1990s resulted in an explosion of entrepreneurial activity leading to the formation of banking institutions. This chapter presents a case study of Royal Bank Zimbabwe, tracing its origins, establishment, and the challenges that the founders faced on the journey. The Bank was established in 2002 but compulsorily amalgamated into another financial institution at the behest of the Reserve Bank of Zimbabwe in January 2005.

Entrepreneurial Origins
Any entrepreneurial venture originates in the mind of the entrepreneur. As Stephen Covey states in The 7 Habits of Highly Effective People, all things are created twice. Royal Bank was created first in the mind of Jeffrey Mzwimbi, the founder, and was thus shaped by his experiences and philosophy.

Jeff Mzwimbi grew up in the high density suburb of Highfield, Harare. On completion of his Advanced Level he secured a place at the University of Botswana. However he decided against the academic route at that time since his family faced financial challenges in terms of his tuition. He therefore opted to join the work force. In 1977 he was offered a job in Barclays Bank as one of the first blacks to penetrate that industry. At that time the banking industry, which had been the preserve of whites, was opening up to blacks. Barclays had a new General Manager, John Mudd, who had been involved in the Africanisation of Barclays Bank Nigeria. On his secondment to Zimbabwe he embarked on the inclusion of blacks into the bank. Mzwimbi’s first placement with Barclays was in the small farming town of Chegutu.

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A Guide to Offshore Banking

yOffshore banking has often been associated with the underground economy and organized crime, via tax evasion and money laundering; however, legally, offshore banking does not prevent assets from being subject to personal income tax on interest. Except for certain persons who meet fairly complex requirements , the personal income tax of most countries makes no distinction between interest earned in local banks and those earned abroad. Persons subject to US income tax, for example, are required to declare on penalty of perjury, any offshore bank accounts–which may or may not be numbered bank accounts–they may have. Although offshore banks may decide not to report income to other tax authorities, and have no legal obligation to do so as they are protected by bank secrecy, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal. Following September 11, 2001, there have been many calls for more regulation on international finance, in particular concerning offshore banks, tax havens and clearing houses such as Clearstream, based in Luxembourg, being accused of being a crossroads for major illegal money flows.

An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include some or all of:

* Strong privacy

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