Lewis downplays Countrywide acquisition talk
February 1st, 2007 - Category: Real EstateBank of America Corp. Chief Executive Ken Lewis has cast doubt on his company’s reported interest in mortgage lender Countrywide Financial Corp., stressing BofA’s strategy is one of organic growth.
Last week, Financial Times reported Charlotte-based BofA and Countrywide were discussing a merger or a joint venture that would pair the nation’s second-largest bank in terms of assets with one of the largest home-loan lenders.
Discussing both possibilities at an investor conference Wednesday, Lewis said BofA is working on a joint venture with China Construction Bank Corp. to provide credit cards in China, but he cast doubt on the bank’s interest in joint ventures generally.
“I can also tell you that we’ve never done one successfully,” he said of joint ventures.
He pointed out that a 1993 brokerage joint venture called Nations Securities with Dean Witter Reynolds Inc. was an “unmitigated disaster.” It ended in 1994 amid regulatory scrutiny and customer complaints over sales practices that ultimately cost the bank millions in legal settlements.
As for an acquisition in the mortgage business, Lewis stressed BofA’s growth strategy does not rely on acquisitions and is focused on selling directly to the consumer.
“We have said unequivocally that our strategy is one of organic growth,” he said.
He also reminded the audience BofA has said before it is not particularly interested in the wholesale or correspondent mortgage-lending business.
“Finally we’ve said that we like the product but don’t like the business,” he said. “All of those things have been a consistent message over the past few years, and they have been said very definitively.”
Countrywide is based in California.
BofA is one of the world’s largest financial institutions, with more than 5,700 retail-banking offices and 17,000 ATMs.
Published January 31, 2007 by the Charlotte Business Journal bizjournals.com
