updated 11/20/2006 8:36:08 AM ET 2006-11-20T13:36:08

Bank of America Corp., the No. 2 U.S. bank, on Monday said it agreed to buy U.S. Trust Corp., the private banking unit of Charles Schwab Corp. , for $3.3 billion to expand in the lucrative business of managing money for wealthy people.

The purchase would create the largest U.S. private banking business, with $261 billion of assets under management, Bank of America said. Bank of America has about $167 billion of assets under management, ranking second, while U.S. Trust has $94 billion, ranking fourth, the companies said.

Adding U.S. Trust “enhances our credibility in this market (and) adds scale,” Bank of America Chief Executive Kenneth Lewis said in a statement.

Charlotte, North Carolina-based Bank of America is using its size and distribution network, including 5,722 branches, to expand in areas where it has not traditionally been dominant.

For Schwab, the deal frees up cash as intensifying competition among brokerages for market share, including from Bank of America, drives commissions lower.

Bank of America last month introduced free online stock trades for many customers, causing shares of discount rivals such as Schwab to fall.

Schwab expects to receive $2.5 billion of after-tax proceeds from the transaction, and realize a $1.9 billion pre-tax gain. It acquired U.S. Trust for $2.9 billion in 2000.

(c) Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com