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BofA Tries to Sell Off Assets 'By the Slice'
September 26, 2011
Bank of America has a stake in a huge pizza chain that presumably qualifies as a nonessential asset - which is why CEO Brian Moynihan would like to sell off this asset, and not because the bank needs capital - which he says he doesn't. BofA hopes it can sell its stake in NPC International, the owner of Pizza Hut franchises, for as much as $880 million.
So, now that outsiders know the bank owns at least one business that's far afield from financial services, the next question is: What else does BofA have stored away in its attic or cellar?
BofA's 'High-End Yard Sale'. The bank has raised more than $40 billion in capital so far this year and is expected to continue selling billions' worth of assets in the coming months. The NYPost called it a “high-end yard sale” and it's supposedly spurred by Moynihan's desire to trim down the bank after its various acquisitions, including Countrywide and Merrill Lynch. The bank already sold its $1.5 billion, 15.6% stake HCA Holdings, a health care company. The bank's correspondent lending arm is also up for sale - Fortress Investment Group is cited as a possible buyer.
These potential asset sales have come into view only a couple months after Moynihan guaranteed the bank didn't need fresh capital. That was after the bank posted a Q2 loss of $8.3 billion. The outlook probably changed thanks to the fact that BofA shares have plummeted 42% since June. That, plus a fresh lawsuit over disgruntled investors who claim the bank should have disclosed that it may have to pay out $10 billion to AIG over toxic mortgages.
With that in mind, it looks like a number of asset sales are in the bank's future. And, perhaps Bank of America should adopt a version of Capital One's "What's in your wallet" commercial with an announcer asking, "What's in your cellar?" [Sorry!] [NY Post, 9/24/11]
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