Bank of America Corp. wants to sell San Francisco-based First Republic Bank in an effort to shore up BofA’s capital, The Wall Street Journal reports, citing individuals familiar with the situation.
The move will be well received by First Republic customers. Some of the bank’s wealthy customers have said they’d like to see the bank become independent. A few have even suggested they might be willing to help finance such a deal.
The bank’s client roster includes CNN’s Larry King as well as actor Rob Lowe, record producer Quincy Jones and actress Penny Marshall. Clients from the Bay Area’s financial community include investment banker Bill Hambrecht, private-equity firm Summit Partners’ Walter Kortschak and venture firm New Enterprise Associates’ Gene Trainor. San Francisco financier Warren Hellman turned to First Republic for financing of his Sugar Bowl ski resort.
First Republic was purchased by Merrill Lynch & Co. Inc. for $1.8 billion in September 2007. The New York brokerage firm ran First Republic as a separate unit, maintaining its name and management. Charlotte-based BofA bought Merrill Lynch on Jan. 1 for $29.1 billion, including $8.6 billion in preferred stock New Year’s Day 2009.
Potential buyers could include Goldman Sachs Group Inc. (NYSE:GS) or Morgan Stanley (NYSE:MS).
First Republic spokesman Greg Berardi declines comment. A BofA spokesman says the bank doesn’t comment on market rumors or speculation.
The future of First Republic under BofA’s ownership has been a hot topic in Bay Area financial circles, given the bank’s affluent customer base that would be attractive to a long list of rivals.
A key concern for these clients is that First Republic’s reputation for highly personalized service will be hard to maintain if it’s integrated into BofA.
“I want First Republic to remain independent so they can continue to provide the extraordinary level of service and a personal relationship with the customer,” says Mark Herrero, chief executive of San Francisco-based Herrero Contractors Inc. Herrero has been a business and personal customer of First Republic for 20 years. “I am concerned that BofA might put First Republic’s ability to deliver this special customer value at risk,” he said.
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