Bank of America to sell First Republic Bank for $1 billion

In another effort to raise capital through asset sale, Bank of America Corporation (BoA), one of the world's largest financial institutions yesterday entered into a definitive agreement to sell its First Republic Bank to a group of investors.

Although detailed terms of the deal have not been disclosed, analysts value the transaction over $1 billion. The group of buyers includes First Republic's existing management and private equity firms Colony Capital LLC and General Atlantic LLC.

Bank of America acquired First Republic in January this year as part of its acquisition of brokerage giant Merrill Lynch and Co Inc. (See: Fed approves Bank of America's acquisition of Merrill Lynch)

Merrill Lynch had bought the San Francisco-based First Republic in 2007 for $1.8 billion. Its client base primarily consisted of high net worth individuals in California, Nevada and New York. As of the end of 30 September, the assets of First Republic stood at $19 billion, deposits at $16 billion and wealth management assets at $15 billion.

Further to the transaction, the present management team will continue in its position, headed by Jim Herbert, chairman and chief executive officer and Katherine August-deWilde, president and chief operating officer.

Both private equity firms had earlier links with First Republic. Colony Capital's head Thomas Barrack was one of the directors of First Republic while General Atlantic was an early investor in the bank. The two together will hold just under 50 per cent of First Republic through the deal.