Unfortunate Victors: The Doomed Battle for ABN AMRO

Photo: Royal Bank of Scotland, Fortis and Banco Santander acquired ABN AMRO Holding for Eur 70.0-billion (USD $101.0-billion) in November 2007, marking it the largest banking acquisition in history up to that point. Ironically, barely one year following their massive acquisition, the Royal Bank of Scotland and Fortis went de facto bankrupt during the credit crisis and were nationalized by Britain (RBS) and Belgium and Luxembourg (Fortis). Meanwhile, the Dutch state bought ABN AMRO's Dutch operations from the bankrupt Fortis, returning the bank to Dutch control.

Children's Money, Adult's Battle

To the Dutch business world, 2007 was a dramatic year that saw the sale of ABN AMRO Holding NV. For several years, ABN AMRO’s management had been questioned for their mediocre management and poor profitability. Then in February 2007, British-based investment fund TCI (The Children’s Investment), holder of about 2% of ABN AMRO’s shares, openly criticized the bank’s management strategy and demanded the bank be sold or split up.

While publicly defending its long-term strategy during March, ABN AMRO held secret talks with British bank Barclays plc about a potential merger. On 2007-03-20, ABN AMRO and Barclays announced that they were in exclusive discussion about a potential combination. Speculation that a bidding war from other European and American banks would erupt lifted ABN AMRO's share prices from under Eur 30 to Eur 35 within days.

While the exclusive discussion between ABN AMRO and Barclays was still in progress, a banking consortium formed by the Royal Bank of Scotland Group (RBS), Belgium’s Fortis and Spain's Banco Santander on 2007-04-13 sent a letter to ABN AMRO’s board expressing their wish to acquire the Dutch bank. The banking consortium’s plans involved carving up ABN AMRO’s extensive global operations. RBS would take over ABN AMRO’s U.S. subsidiary LaSalle Bank, as well as ABN AMRO’s retail, commercial and investment banking businesses outside of Brazil, Italy and the Netherlands. RBS already had a sizable U.S. subsidiary named Citizens Financial. By acquiring Chicago-based LaSalle Bank, RBS could achieve greater synergy and efficiency in the U.S.

Meanwhile, Fortis planned to take over ABN AMRO’s home market in the Netherlands, as well as its global private banking and asset management divisions. Lastly, Banco Santander, which already operated extensively in Latin America, would take over ABN AMRO’s Brazilian operations Banco ABN AMRO Real, and expand into the high-growth Italian market by acquiring ABN AMRO’s Banca Antonveneta. With much more overlap in their existing markets, the tri-bank consortium could achieve much more cost savings and afford a higher price for ABN AMRO than Barclays.

The Dutch Central Bank, De Nederlandsche Bank (DNB), favouring a merger of equals between Barclays and ABN AMRO over the consortium’s break-up proposal, warned on 2007-04-18 of the risks and complications in “the preparation… the execution and implementation” of the [consortium’s] proposal. His comments, however, were immediately criticized by the European Commission that nationalist protectionism must not be used to discourage cross-border consolidation within the EU.

Barclays-ABN AMRO's Poison Pill

After a month of exclusive talks, Barclays and ABN AMRO jointly-announced on 2007-04-23 that they had agreed to an all-stock deal that valued ABN AMRO at Eur 67.0-billion (GBP 45.4-billion, USD $91.0-billion), making it the biggest banking merger ever. At the same time, ABN AMRO also announced that it had agreed to sell its U.S. operations LaSalle Bank (officially known as ABN AMRO North America Holding Co.) to Bank of America for USD $21.0-billion (Eur 15.46-billion) in cash. ABN AMRO’s surprise announcement to pre-emptively sell LaSalle Bank was clearly a “poison-pill” move to fend off the breakup proposal from RBS, Fortis and Santander. Without LaSalle Bank, the division most sought after by RBS, it was believed that consortium might disband itself.

Under the Barclays-ABN AMRO merger proposal, the new bank would retain the name Barclays plc, and have its head office in Amsterdam. Existing Barclays shareholders would end up owning 52% of the new bank, while the remaining 48% would be owned by the former ABN AMRO shareholders. About 12,800 jobs would be cut from the combined operations. Consolidation cost savings would amount to Eur 3.5-billion annually.

Furious Consortium Counter-offers

Understandably, RBS, Fortis and Santander were furious about ABN AMRO’s agreement to sell LaSalle Bank to Bank of America for USD $21.0-billion. British investment fund TCI and Dutch investor rights group VEB both demanded that the terms of the LaSalle Bank sale be made public, and a shareholders’ meeting be called to vote on the sale.

Barely two days following the Barclays offer, RBS, Fortis and Santander made an unsolicited, informal offer of Eur 72.2-billion (USD $98.5-billion) for ABN AMRO, triggering a dramatic takeover battle. The consortium’s offer consisted of 70% in cash and 30% in stock. However, the offer was conditional on ABN AMRO rescinding its agreement to sell LaSalle Bank. Analysts generally favoured the consortium’s offer, as it was higher than the one proposed by Barclays, and had a high cash component as opposed to Barclays’ all-stock offer, whose value had fallen to Eur 65.0-billion (USD $88.2-billion) due to a drop in Barclays’ share prices. When ABN AMRO’s management refused to let its shareholders vote on the sale of LaSalle Bank, shareholder rights group VEB launched a lawsuit against the Dutch bank.

Throughout April and May 2007, the market wildly speculated that HSBC, BNP Paribas, BBVA and JPMorgan Chase could also bid for ABN AMRO. There were also rumours that Société Générale and UniCredit were in merger talks with each other.

ABN AMRO’s uncertain future prompted some clients to pull their savings from the bank and others to express concerns. ABN AMRO’s employees and labour unions accused the shareholders of selling out one of Netherlands’ most important businesses, and urged the shareholders to put the future of Dutch jobs and the Dutch economy ahead of greed.

Meanwhile, Bank of America, eager to acquire LaSalle Bank from ABN AMRO, signalled that it would sue ABN AMRO should the LaSalle Bank sale agreement be rescinded, potentially triggering a lengthy and nasty legal battle across the Atlantic.

While all the parties waited for the Enterprise Chamber of the Amsterdam Court of Appeal’s ruling on the VEB lawsuit, ABN AMRO openly questioned how the consortium could come up with more than Eur 50.0-billion in cash to pay for the offer.

The Trans-Atlantic Lawsuits

On 2007-05-03, the Enterprise Chamber of the Amsterdam Court of Appeal ruled that ABN AMRO’s sale of LaSalle Bank to Bank of America was illegal, and that ABN AMRO must obtain shareholders’ approval before the sale could proceed. Within 24 hours of the Dutch court’s ruling, Bank of America filed a lawsuit in the U.S. District Court in Manhattan demanding ABN AMRO to go ahead with the sale.

At the same time, Dutch finance minister Wouter Wos also waded into the takeover drama by urging the RBS-Fortis-Santander consortium to clarify on their financing and breakup implementation plans.

Not backing down from the legal setback, Barclays and ABN AMRO filed an appeal on 2007-05-15 to the Dutch Supreme Court over the ruling that froze the sale of LaSalle Bank to Bank of America. Then two weeks later, RBS, Fortis and Santander officially presented their hostile Eur 71.1-billion offer for ABN AMRO.

The takeover battle went through a month of relative calm until 2007-06-25, when the most senior advisor to the Dutch Supreme Court, Attorney General Levinius Timmerman concluded that ABN AMRO’s sale of LaSalle Bank to Bank of America was legal, and should not be blocked. The Attorney General’s legal opinions, while not binding, have historically been highly regarded by the Supreme Court.

Barclays-ABN AMRO: 1 Consortium: 0

On 2007-07-13, as expected, the Dutch Supreme Court cleared ABN’s sale of LaSalle Bank to Bank of America. Analysts began to wonder if the setback would cause RBS to pull out of the consortium. By now, however, a further drop in Barclays’ share prices meant that its offer has fallen in value to Eur 63.7-billion (USD $87.6-billion).

Despite the failure to secure LaSalle Bank, the RBS-Fortis-Santander consortium not only pressed on with the offer, but on 2007-07-16 raised the cash component of their offer from 70% to 93.5%, with the rest payable in Royal Bank of Scotland shares. This meant that the consortium now needed to come up with Eur 65.7-billion (USD $90.4-billion) in cash to buy ABN AMRO.

Barclays Gets Hot Money from Asia

Barclays, refusing to back down from the battle, also worked behind the scene to look for ways to raise its offer. Exactly one week after the consortium raised their cash portion of the offer, Barclays raised GBP 2.44-billion (Eur 3.6-billion, USD $4.97-billion) in cash by issuing a 3.1% stake to China Development Bank and a 2.0% stake to Singapore’s sovereign fund Temasek Holdings. Barclays would use the proceeds to buy back its own shares to support its share price. Should the bid for ABN AMRO succeed, China Development Bank had committed to invest another GBP 3.64-billion worth of Barclays shares, whereas Temasek had committed to invest another GBP 499-million worth of Barclays shares.

Armed with this freshly-injected GBP 2.44-billion cash, Barclays raised its offer for ABN AMRO to Eur 67.5-billion (USD $93.1-billion) and added a cash component to it: the new offer was 37% in cash and 63% in Barclays’ shares. Barclays’ new offer was still 5% below that from the tri-bank consortium, but the bank was betting that its share buyback programme would prompt investors to bid up its share prices. It was also hoping that ABN AMRO’s shareholders might favour the friendly merger deal over the uncertainties surrounding the consortium’s offer.
However, Barclays’ new offer failed to ignite investor enthusiasm and the value of its offer continued to linger around Eur 66.0-billion rather than catch up to the consortium’s Eur 72.0-billion.

Consortium Seeks Eur 65.7-Billion, in Cash

In late July, there were doubts over whether Fortis, the smallest member in the consortium, could raise the Eur 24.0-billion from investors to finance its share of the ABN AMRO purchase. For much of late July and August, ABN AMRO shares traded between Barclays’ offer price and the consortium’s offer price, suggesting uncertainties over the outcome of the battle. However, Fortis, RBS (Eur 22-billion) and Santander (Eur 19.8-billion) all successfully raised the cash required to pay for ABN AMRO.

Barclays, meanwhile, was understood to be taking a wait-and-see stance, as it was convinced that the Dutch central bank and the EU anti-trust authorities would place tough conditions on Fortis’ plan to take over ABN AMRO’s Dutch operations.

Tremors from the U.S.

The takeover battle for ABN AMRO took another unexpected twist in August, when the credit crisis suddenly caused banks around the world to tighten lending activities. The formerly red-hot U.S. housing market, which had been in a slump since late 2006, began to cause massive loan losses in the global banking sector throughout the summer of 2007. Corporate bond prices slumped and trading of higher-risk mortgage loans, often packaged and re-sold to investors as collateralized debt obligations (CDOs), came to an abrupt halt when mortgage default rates soared. As many companies around the world had invested their short-term cash in these CDOs, the seize-up of CDO market caused a sudden shortage of cash. The resulting liquidity crisis led stock markets around the world to tumble. At one point, there were fears that both Barclays and the consortium would withdraw its offer for ABN AMRO due to their high exposure to the alternative investment market.

During the first wave of the credit market crunch in late-August, the value of Barclays’ mostly-stock offer fell sharply to Eur 58.4-billion (USD $79.3-billion, GBP 40.0-billion), essentially wiping out all the gain made by the cash injection from China Development Bank and Temasek. Despite a significant fall in RBS’ and Fortis’ share prices also, the value of the RBS-Fortis-Santander offer remained relatively steady at around Eur 70.6-billion (USD $96.5-billion) due to its high cash element. Nevertheless, several of RBS’ institutional shareholders in September 2007 were believed to have urged the bank to activate the “material adverse event” clause to reduce or even cancel the offer for ABN AMRO.

Cash is King. Barclays Loses the Battle But Wins Eur 200-million

Meanwhile, Barclays’ hope that Fortis would face anti-trust challenges in the Netherlands was dashed on 2007-10-03, when the European Commission cleared RBS-Fortis-Santander’s acquisition of ABN AMRO. One day after that, only 0.28% of the outstanding ABN shares were tendered to Barclays and the British bank conceded defeat. In accordance with the friendly merger agreement, ABN AMRO paid Barclays a Eur 200-million breakup fee. Meanwhile, the RBS-Fortis-Santander consortium received more than 86% of ABN AMRO’s shares and made its offer unconditional. The consortium's higher and almost all-cash offer clearly won over the hearts of ABN AMRO’s shareholders at uncertain times. At closing, the consortium’s offer was worth about Eur 70.0-billion (USD $101.0-billion).

Two of the Three Victors Became Big Losers

Even though RBS, Fortis and Banco Santander appeared to be the victors, against all odds, in the takeover battle for ABN AMRO, it soon became apparent that their acquisition could not have been executed at a worse time.

Throughout 2008 and 2009, the global real estate bubble burst and the CDO market collapsed. Recklessly careless lending by banks and carefree borrowing from consumers since 2000 together contributed to a massive housing and credit bubble in the United States, Great Britain, Spain, Ireland, Iceland and Eastern Europe. A huge amount of these consumer loans was re-packaged into “innovative” investment products that were off-balance-sheet, meaning that the loans were not subject to regulatory capital requirements.

When the bubble burst in 2007 and 2008, the impact was so severe that many of the world’s largest financial institutions including Citigroup, Bank of America, Wachovia, Merrill Lynch, Morgan Stanley, HBOS, Royal Bank of Scotland, Fortis and UBS certainly would have gone bankrupt were it not a concerted effort by governments around the world to inject much-needed capital into the banks, and to unconditionally guarantee their loan losses and customer deposits.
Shockingly, less than one year following their triumphant purchase of ABN AMRO, both the Royal Bank of Scotland and Fortis were de facto bankrupt in September 2008. At this point the Dutch state decided to buy ABN AMRO's Dutch operations from the bankrupt Fortis, which ironically, returned ABN AMRO to Dutch control. The Royal Bank of Scotland only survived because the British government nationalized the bank by injecting billions of pounds of new capital, as well as insuring hundreds of billions of sour loans against losses. Similarly, Fortis was nationalized by the Belgian and Luxembourg states. Fortis' Belgian operations were then taken over by BNP Paribas. Both RBS’ and Fortis’ shareholders lost almost 100% of their investment.

The Shrewd Santander

Banco Santander, on the other hand, came out of the ABN AMRO drama as a true and respected winner. In fact, just when the whole ABN AMRO deal was being closed, Santander surprised the market by selling Banca Antonveneta, ABN AMRO's Italian division that it had just acquired days earlier, to Banca Monte dei Paschi di Siena for Eur 9.0-billion (USD $13.21-billion) in cash. This meant that Santander only paid about Eur 9.8-billion for Banco ABN AMRO Real of Brazil, which was considered to be a bargain.

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Netherlands Bank Mergers & Acquisitions (ABN AMRO Holding)

Photo: Banks are perhaps some of biggest spenders in marketing. Shown here is a pair of Team ABN AMRO cuff-links in the around-the-world Volvo Ocean Race 2005-2006.

In late 2007, ABN AMRO Holding was taken over by a consortium formed by the Royal Bank of Scotland, Belgium's Fortis S.A./NV and Spain's Banco Santander. Subsequently, both the Royal Bank of Scotland and Fortis became de facto insolvent. The Dutch operations of Fortis and ABN AMRO were nationalized by the Dutch state in October 2008.

ABN AMRO Holding NV

Algemene Bank Nederland (ABN)
Thanks to their strategic locations on the coast of the North Sea, Amsterdam and Rotterdam have functioned as major trading, transportation and financial centres since the 1600s. To further strengthen their role in trade and finance, King William I of the Netherlands signed a Royal Decree in 1824 establishing the Nederlandsche Handel-Maatschappij (NHM, or Netherlands Trading Society) in Amsterdam. Gradually, the Nederlandsche Handel-Maatschappij turned its attention to trade financing. 

By the late 1920s, NHM had established offices across the world, including in multiple posts in present-day Indonesia, and in Singapore, Malaysia, Japan, Hong Kong, China, Myanmar (Burma), India, Suriname and Saudi Arabia. In October 1964, it merged with De Twentsche Bank to become the Algemene Bank Nederland (ABN), which is Dutch for "General Bank Netherlands".

Interestingly, some of NHM's former offices grew into rather sizeable operations. For example, NHM's Jeddah office (founded in 1926) became a Saudi Arabian bank. In 1977, to comply with a new legislation requiring all foreign banks to cede majority control of their local subsidiaries to Saudi Arabian interests, ABN Saudi Arabia (successor to the NHM) was  renamed Saudi Hollandi Bank, with ABN AMRO retaining a 40% stake until ABN AMRO itself was taken over and broken up by RBS, Banco Santander and Fortis.


Amsterdam-Rotterdam Bank (AMRO Bank)
Amsterdam and Rotterdam have been rivals in winning trade and finance since the medieval times. In 1863, the business leaders in Rotterdam set up the Rotterdamsche Bank, which was modelled after British colonial banks like the Mercantile Bank and the Chartered Bank. Initially, Rotterdamsche Bank specialized in providing loans to companies operating in the Dutch East Indies (present-day Indonesia, then a Dutch colony). Subsequently, the bank decided to expand its operations at home in the Dutch market. Early in the 20th century, Rotterdamsche Bank changed its name to Rotterdamsche Bankvereeniging, or Robaver for short. In 1964, Robaver merged with Amsterdamsche Bank, which was founded in 1871 to focus on the Dutch and German money markets. The new bank was known as the Amsterdam-Rotterdam Bank, or AMRO Bank for short.

Recent transaction(s):

• In 1990, ABN and AMRO Bank announced a friendly merger to create ABN AMRO Holding NV.
• In 1996, ABN AMRO bought Standard Federal Bancorp for USD $1.9-billion. Standard Federal was based in Troy, Michigan.
• In 1998, ABN AMRO bought Brazil's 4th largest bank Banco Real for USD $2.1-billion to form Banco ABN AMRO Real.
• In 2001, ABN AMRO's U.S. division LaSalle Bank bought Michigan National Bank from National Australia for USD $2.75-billion.
• In 2003, ABN AMRO’s Brazilian division Banco ABN AMRO Real bought Banco Sudameris from Italy's Banca Intesa for Eur 648-million.
• In 2005, ABN AMRO offered to buy the 87.3% of Italy's Banca Antonveneta that it did not already own for Eur 6.30-billion (USD $8.10-billion). Following ABN AMRO's announcement, Banca Popolare Italiana (formerly Banca Popolare di Lodi) launched its own but lower offer for Banca Antonveneta. Subsequently, it was discovered that Banca d'Italia's (Italy's central bank) governor Antonio Fazio had secretly pushed for a "made-in-Italy" merger between Popolare Italiana and Antonveneta over the higher offer from ABN AMRO. The scandal resulted in Mr. Fazio’s resignation and the suspension of Popolare Italiana's senior executives. In late 2005, ABN AMRO was given the final approval to take over Banca Antonveneta in a deal that valued the Italian bank at Eur 8.12-billion (USD $9.80-billion). The takeover of Antonveneta was the first time a major Italian bank had been acquired by a foreign bank.
• In 2007, ABN bought 93.4% of Pakistan's Prime Bank for PKR 13.8-billion (Eur 172-million). ABN also launched a tender offer for the remaining 6.6% shares in the open market. Prime Bank operated 69 branches in 25 Pakistani cities. The bank had Eur 654-million in assets and Eur 515-million in deposits.
• In April 2007, ABN AMRO and Britain’s Barclays plc agreed to a friendly merger. ABN AMRO had been under shareholder pressure for its under-performing profitability for several years. Barclays’ initial all-stock offer valued ABN at Eur 67.0-billion. Meanwhile, the Royal Bank of Scotland (RBS), Belgium’s Fortis and Spain’s Banco Santander were also preparing for a competing bid to buy out and carve up ABN AMRO Holding amongst themselves. Hoping to thwart the hostile offer from RBS-Fortis-Santander, ABN AMRO agreed to sell ABN AMRO North America Holding Co. (LaSalle Bank Corp.) to Bank of America for USD $21-billion in cash. RBS had wanted to combine its U.S. division Citizens Financial with ABN AMRO's LaSalle Bank. In pre-emptively selling LaSalle Bank to Bank of America, ABN AMRO was hoping to make itself unattractive to the Scottish-Belgian-Spanish consortium and foil the "break up ABN AMRO" proposal.
• In 2007, amidst the battle for ABN AMRO Holding, the Dutch bank agreed to accept TWD 6.90-billion (USD $209-million) from the Taiwan government to takeover the operations of the bankrupt Taitung Business Bank. Taitung Business Bank had been under state administration due to its overwhelming non-performing loan portfolio. Under the agreement, the Taiwan government would pay TWD $6.90-billion to ABN to take over Taitung Business Bank's assets, liabilities and 32 branches. ABN AMRO already operated five branches in Taiwan.
• In late 2007, ABN AMRO Holding lost its autonomy when its shareholders accepted a Eur 70.0-billion (USD $101.1-billion) buyout from the Royal Bank of Scotland (with a 38.3% stake), Fortis (33.8%) and Banco Santander (27.9%). The tri-bank consortium would break up ABN AMRO's various global operations amongst themselves in two years. Click here for a detailed timeline of the Battle for the Control of ABN AMRO.
• During the second half of 2008, the RBS and Fortis were caught up in the Global Banking Meltdown. As financial institutions failed around the world from massive loan losses incurred from the U.S. real estate collapse, banks became unwilling to lend to each other, resulting in a sharp rise in the Libor rates (London Inter-bank Borrowing Rates). Banks that had over-extended themselves, including RBS and Fortis, became insolvent as their funding source dried up.
• On 2008-09-29, the Belgian, Dutch and Luxembourg governments jointly rescued Fortis by providing Eur 11.2-billion (USD $16.2-billion) of emergency funding. The Belgian state agreed to buy 49% of Fortis' Belgian banking unit, Fortis Bank S.A./NV for Eur 4.7-billion (USD $6.79-billion); the Dutch state agreed to buy 49% of the Dutch bank unit, Fortis Bank Nederland Holding, for Eur 4.0-billion (USD $5.78-billion); whereas Luxembourg agreed to buy Eur 2.5-billion (USD $3.61-billion) of bonds convertible into 49% of the local unit Fortis Banque Luxembourg. Fortis was also expected to auction off the ABN AMRO businesses that it had just paid Eur 24-billion for in 2007. However, the most likely buyer, ING Groep, had announced that it was not interested in bidding for ABN AMRO’s global operations.
• However, the massive cash injection from Belgium, the Netherlands and Luxembourg failed to quell widespread fears over Fortis’ survival, and clients were said to be transferring their deposits to other banks. On Friday 2008-10-03, the Dutch government made a surprise announcement that it had agreed to nationalize the entire Dutch operations of Fortis S.A./NV for Eur 16.8-billion (USD $23.2-billion). The units bought by the Dutch government included all of Fortis Bank Nederland (Holding) NV, Fortis’ interests in ABN AMRO, insurer Fortis Verzekeringen Nederland NV, and Fortis Corporate Insurance NV. The Dutch government’s deal to buy all of Fortis’ Dutch banking and insurance operations replaced the deal to buy 49% of Fortis Bank Nederland for Eur 4.0-billion (USD $5.78-billion) announced just a week earlier.
• Even though Fortis’s Dutch operations were not believed to be badly in distress, the Belgian-based parent Fortis S.A./NV had been teetering on the brink of collapse. The Dutch government said in a statement that the nationalization of Fortis Nederland and ABN AMRO was needed to stabilize the panicky Dutch monetary system. The deal gave the Dutch government the entire control of the bancassurance operations, which would make it much easier to sell than had the government only acquired a minority stake. The deal also allowed Belgian-based Fortis to receive badly-needed capital.
• The Dutch government planned to merge ABN AMRO and Fortis Bank Nederland into a new entity and privatize it in 2011 or later.
• In November 2015, the Dutch government floated 20% of ABN AMRO on the Amsterdam stock exchange and raised EUR 3.34-billion, valuing the bank at EUR 16.7-billion. The Dutch state expected to take several years to unload all of ABN AMRO back to private shareholders.
• During the summer of 2016, Swedish bank Nordea approached the Dutch government to acquire the majority-state-owned ABN AMRO, but the Dutch government was not interested in selling its stake. At the time, ABN AMRO had a market value of over EUR 17.0-billion.
• In December 2016, ABN AMRO sold its private-banking business in Asia and the Middle East to Liechtenstein-based LGT Group. Terms of the sale were not disclosed. The unit managed USD $20-billion in Singapore, Hong Kong and Dubai. LGT is owned by Princely House of Liechtenstein and the purchase would increase its assets under management to more than USD $40-billion in Asia, and $160-billion globally.

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United States Bank Mergers & Acquisitions (Bank of America)

Photo: A Bank of America office in Lincoln Square, New York City.
With special thanks to my friends Don and Rupert for taking this photo for me during their trip to New York.

Bank of America Corp.

Like many major banks in the United States, Bank of America was created through numerous combinations over the past two centuries. A vast majority of the constituent banks were too small to worth a mention here. Having said that, Bank of America's genealogy can be traced to three major lineages:

1. The original Bank of America (San Francisco)
2. FleetBoston Financial (Boston)
3. Nationsbank (Charlotte, North Carolina)

Genealogy: The FleetBoston lineage (BankBoston, Fleet Financial)

BankBoston Corp.

In 1784, Massachusetts governor John Hancock signed a state charter to create the Massachusetts Bank, one of earliest commercial banks in the U.S. The bank in 1786 financed the first ever sailing of an American ship to China, commencing direct trade between the two countries. Then in 1791, the bank backed the first American ship to Argentina, establishing the Massachusetts Bank's (later BankBoston) long presence in Latin America.

The bank was renamed Massachusetts National Bank in 1864. Then in 1903, First National Bank of Boston (founded in 1859) and Massachusetts National merged, retaining the name First National Bank of Boston. Following the 1929 Stock Market Crash and banking crisis, the passing of the Glass-Steagall Act required the separation of stock brokerage from commercial banking functions. First National of Boston was forced to spin off its stock brokerage businesses into a new entity called First Boston Corp. in 1934. This was the same First Boston that was acquired by Credit Suisse in 1988 to become Credit Suisse First Boston (CSFB).

Fleet Financial Group

In 1987, Providence, Rhode Island-based Fleet Financial acquired Albany, New York-based Norstar Financial Corp. for USD $1.3-billion. At the time of the merger, Fleet had 490 branches in New England, whereas Norstar had 375 branches mostly in Buffalo, Syracuse and in Long Island. The new entity was named Fleet/Norstar Financial. The name was eventually shortened to Fleet Financial.

Genealogy: The NationsBank lineage (NCNB, C&S/Sovran)

Nationsbank

In 1874, Commercial National Bank was founded in Charlotte, North Carolina, to finance the developing textile industry that was based on the cotton crop. In 1957, Commercial National combined with American Trust Co. to form American Commercial Bank. The 1960 merger between the Charlotte-based American Commercial Bank and Security National Bank of Greensboro created the North Carolina National Bank (NCNB). Despite a long-held prohibition on inter-state banking in the U.S. (i.e. banks based in one state were generally banned from acquiring banks in other states), in 1981 NCNB discovered a loophole in Florida's law which would allow it to acquire banks in that state using a subsidiary that it had owned before the ban took effect in December 1972. NCNB won the challenge and bought in quick successions a number of Floridan banks, starting with the First National Bank of Lake City, soon building up a network in the Sunshine state. 

In 1985, a reciprocal inter-state banking agreement covering North Carolina, South Carolina, Georgia and Florida took effect, formally opening the floodgate of inter-state bank consolidations in the Southeast.

C&S Sovran

In 1990, South Carolina's Citizens and Southern Bank merged with Sovran Financial of Norfolk, Virginia. The new entity took the name C&S/Sovran Corp. and was based in Norfolk.

Genealogy: The BankAmerica lineage

In 1904, a second-generation Italian immigrant A.P. Giannini saw the growth potential of banking service for the thousands of immigrants arriving in California each year and established the Bank of Italy in San Francisco. Merely two years later, the Great Earthquake of 1906 devastated the entire city, including the Bank of Italy building. Fortunately, the vault was not damaged by the earthquake and the fire that swept through the city. Mr. Giannini immediately recovered the cash and gold from the vault and set up a makeshift office by the waterfront. Loans were made to the survivors often just on a handshake. Bank of Italy not only survived the disaster intact, but made a name for its efforts in helping to rebuild San Francisco.

By 1930, Bank of Italy's focus had long expanded beyond its original Italian immigrant market. Following a merger with a New York bank named Bank of America, the Bank of Italy was renamed the Bank of America (of California). In the same year, A.P. Giannini bought the Occidental Life Insurance Co. and placed all his banking, insurance and industrial businesses under a holding company called Transamerica Corp. As the name implies, Giannini's original plan was to create a nationwide banking, insurance and industrial conglomerate.

Bank of America's willingness to invest in the community during tough times was once again proven during the Great Depression in the 1930s, when it took the leadership in subscribing $6-million of the $35-million bond issue needed to build the Golden Gate Bridge over San Francisco Bay.

In 1956, the Congress passed the Bank Holding Company Act forbidding holding companies from owning both banks and non-bank entities. Transamerica Corp. was hence forced to divest its Bank of America subsidiary to concentrate on the insurance business. In 1958, Bank of America introduced the first general-purpose credit card called the Bank Americard. The bank soon realized that for the credit card to gain market share nationally, it must be made available to other banks outside of its home state of California. In 1966, other banks began to issue Bank Americards under licenses, making it the first credit card to be accepted by merchants nationwide. In 1975, Bank Americard became the VISA card, presently the world's most popular credit card.

In 1983, Bank of America expanded outside of California when it acquired the financially-troubled Seattle-based SeaFirst Corp. (Seattle First National Bank) from the Federal Reserve Bank of San Francisco for USD $250-million plus $150-million in new capital into SeaFirst.

Recent transaction(s):

• In April 1991, Fleet/Norstar bought the bankrupt Bank of New England Corp. from the U.S. Federal Deposit Insurance Corp. (FDIC), which had become the receiver to the bank holding company when it failed in January 1991 after suffering severe losses from sour real estate loans.
• In 1992, NCNB Corp. acquired C&S/Sovran Financial for USD $4.3-billion. The new bank took the name Nationsbank.Also in 1992, BankAmerica Corp. [old] acquired its California rival Security Pacific Corp. in a USD $4.3-billion deal.
• In 1995, Fleet bought Hartford, Connecticut-based Shawmut National Corp for USD 43.7-billion.
• Also in 1995, Fleet Financial bought National Westminster Bancorp (the U.S. retail bank unit of Britain's National Westminster Bank) for USD $3.6-billion (GBP 2.3-billion). National Westminster Bancorp had about 310 branches in New York and New Jersey.
• In 1996, Bank of Boston Corp. merged with BayBanks Inc. and took the new identity of BankBoston Corp.
• In 1996, NationsBank acquired St. Louis, Missouri-based Boatmen's Bancshares, Inc. for USD $9.46-billion.
• In January 1998, NationsBank took over Jacksonville, Florida-based Barnett Banks Inc. for USD $15.5-billion.
• In September 1998, NationsBank acquired San Francisco-based BankAmerica Corp. [old] in a USD $66.0-billion deal. The new entity took the name Bank of America Corp. and is based in Charlotte, North Carolina.
• In 1999, Fleet Financial Group Inc. and Bank of Boston Corp. merged to form FleetBoston Financial Corp. in a deal valued at USD $16.3-billion.
• In 2000, FleetBoston Financial acquired New Jersey's biggest bank, Princeton-based Summit Bancorp for USD $7.0-billion.
• In 2003, Bank of America Corp. [new] acquired FleetBoston Financial Corp. for USD $48.0-billion.
• Also in 2003, Bank of America bought 24.9% of BSCH Mexico (now Santander Mexico) from BSCH (now Banco Santander) for USD $1.6-billion.
• In 2005, Bank of America acquired a strategic, 9% stake in China Construction Bank for USD $3.0-billion.
• Also in 2005, Bank of America bought credit card specialist MBNA Corp. for USD $35.0-billion.
• In 2006, bought U.S. Trust for USD $3.3-billion in cash from Charles Schwab Corp. U.S. Trust provided private banking service to wealthy clients.
• Also in 2006, Bank of America sold its Brazilian-based BankBoston to Banco Itau (now Itau Unibanco) for BRL 4.5-billion (USD $2.2-billion) in Itau stock. BankBoston provided banking services to high net-worth clients in Brazil, Chile and Uruguay.
• In 2007, in a highly unusual move, Bank of America, along with JPMorgan Chase & Co., private equity firms J.C. Flowers & Co. and Friedman Fleischer & Lowe LLC agreed to buy SLM Corp., better known as Sallie Mae, for USD $25.0-billion. Sallie Mae provided student loans in the U.S. Bank of America and JPMorgan Chase & Co. were each to take a 24.9% stake in Sallie Mae for a total of 49.8%; the two private equity firms would acquire the other 50.2% stake of the student loan underwriter. The purchase of a major financial service firm in a leveraged buyout (LBO) deal was very rare, as LBO transactions involve loading the acquired company with billions of debt, but the financial services sector is governed tightly by regulators with restrictive funding and reserve requirements.
• In October 2007, the consortium buyout group, citing a "material adverse event" has occurred due to new student loan legislation passed by Washington, revised its offer for SLM Corp. to USD $21.0-billion from USD $25.0-billion. SLM then threatened to sue the buyout consortium unless it either paid the original offer, or walked out and paid the previously-agreed upon USD $900-million termination fee to SLM Corp.
• Also in 2007, Bank of America agreed to purchase LaSalle Bank Corporation (ABN AMRO North America Holding Co.) from Netherlands's ABN AMRO Holding NV for USD $21-billion in cash. LaSalle Bank, headquartered in Chicago, operated more than 400 branches in Illinois, Michigan and Indiana. The purchase of LaSalle Bank filled Bank of America’s void in the Chicago/Midwest market. The purchase, however, would push Bank of America's share of deposit to over 10% of the total deposit in the U.S., which was prohibited by U.S. banking regulations. It was believed that Bank of America would need to give up some branches and clients to win anti-trust approval for the LaSalle Bank purchase.
• In August 2007, Bank of America invested USD $2.0-billion of non-voting convertible preferred stock in Countrywide Financial Corp. The convertible preferred shares would pay 7.25% dividend per annum and could be converted into Countrywide Financial's common stock at USD $18 per share, a 21% discount to Countrywide's share price at the time. When the conversion is exercised, Bank of America would own 16% of Countrywide, the largest mortgage lender in the U.S.
• In January 2008, amidst widespread fears that Countrywide Financial was heading towards bankruptcy, Bank of America agreed to takeover Countrywide for USD $4.0-billion in stock. The offer price of about USD $7.16 per Countrywide share was actually about 7.6% below the previous day's closing price. Before rumours of the deal surfaced the day before, Countrywide's shares had fallen to below USD $5 per share due to the insolvency fears. Countrywide's stock was trading at around USD $22.75 when Bank of America made a USD $2.0-billion investment into its convertible preferred shares in August 2007.
• Also in late January 2008, Bank of America, JPMorgan Chase & Co. and SLM Corp. (Sallie Mae) settled out of court over the failed buy-out of SLM Corp. by the J.C. Flowers & Co.-led buy-out group. Under the original deal, the buy-out group had agreed to acquire SLM for USD $25.0-billion, and had provided SLM a USD $30.0-billion financing package that would expire on 2008-02-15. As the global credit squeeze deepened in 2007, the buy-out group rescinded its offer in October, and SLM was left with the severe challenge of re-financing the USD $30.0-billion short-term loan that was part of the buy-out offer. SLM responded with a lawsuit pressing the buy-out group to either proceed with the original offer, or pay a USD $900-million termination fee. Under the settlement, a banking group consisting of Bank of America, JPMorgan Chase, Barclays Capital, Deutsche Bank, Credit Suisse, the Royal Bank of Scotland and UBS agreed to provide a USD $31.0-billion financing to SLM for 364 days. SLM agreed to drop the lawsuit against the J.P. Flowers & Co.-led buy-out group. The new financing would ease the skyrocketing borrowing cost for SLM, as the credit crisis had made investors around the world wary of lending to financial institutions.
• In 2008, Bank of America exercised its call option to buy additional shares of China Construction Bank (CCB) for HKD $14.52-billion (USD $1.86-billion). The purchase would raise Bank of America's stake in CCB to 10.75% from 8.2%. The shares being bought actually had a market value of HKD $39.9-billion (USD $5.11-billion). The low exercise price was agreed upon back in 2005 before CCB went public. CCB shares had soared since Bank of America's initial investment.
• In 2008, Bank of America sold its hedge fund servicing prime brokerage unit to France's BNP Paribas for a reported USD $300-million (Eur 194-million). The unit had about 500 hedge fund clients.
• On 2008-09-14, amidst the collapse of Lehman Brothers Holdings Inc. and fears of the rapidly spreading banking crisis, Bank of America agreed to acquire Merrill Lynch and its debt for USD $50.0-billion in stock. Shareholders would receive 0.8595 share of Bank of America for each Merrill Lynch share. The combination would amalgamate America's largest retail bank with the brokerage house with the largest retail client base. However, by the time Merrill Lynch shareholders approved the sale to Bank of America on 2008-12-05, the value of the all-stock deal had fallen to USD $19.36-billion.
• Following the lead of Britain’s GBP 37-billion (USD $64-billion) partial nationalization of The Royal Bank of Scotland Group, HBOS and Lloyds TSB Group, the U.S. government unveiled a similar plan on 2008-10-14 under which the U.S. Treasury would invest USD $250-billion in nine major U.S. banks. The nine banks that issued new preferred stock in exchange for USD $250-billion in funds were: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of New York Mellon, and State Street. All nine banks’ preferred stock would pay 5% dividends annually in the first five years, and 9% thereafter until the bank redeems them. The funds were disbursed under the name Troubled Asset Relief Program (TARP). Bank of America obtained USD $25-billion under TARP.
• On 2008-11-18, Bank of America further raised its stake in China Construction Bank (CCB) to 19.10% from 10.75% for HKD $54.8-billion (USD $7.07-billion). The USD $7.07-billion CCB stake taken up by Bank of America actually had a market value of HKD $80.47-billion (USD $10.38-billion). The exercise price paid by the American bank was based on a call option agreement reached between the two banks back in 2005.
• In January 2009, following the expiry of a previously-agreed locked-up period, Bank of America sold a 2.50% stake in China Construction Bank for USD $2.83-billion. Bank of America would book a USD $1.13-billion gain on the sale. Following the sale, the bank’s stake in China Construction Bank, the world’s biggest at the time based on market capitalization, would fall to 16.60% from 19.10%.
• Just weeks after closing the deal to buy Merrill Lynch, Bank of America requested and received USD $118-billion in fresh capital and loan guarantees from the U.S. federal government to help it stomach the losses at Merrill Lynch. Bank of America would receive USD $20-billion cash from the government, which was in addition to the USD $25-billion in TARP rescue funds it had already received. The U.S. federal government would also absorb up to USD $98.2-billion of potential losses from Bank of America and Merrill Lynch’s toxic assets. In exchange for the new rescue pact, Bank of America would issue the U.S. government USD $4-billion of preferred securities.
• In 2009, Bank of America sold a 5.78% stake (13.5-billion shares) of China Construction Bank for USD $7.32-billion (HKD $56.74-billion). Following the sale, Bank of America would hold an 11% stake in the Chinese bank. The buyers were Asian institutional investors that included China Life.
• In October 2009, Bank of America sold private bank First Republic to a private-equity buyout group led by General Atlantic and Colony Capital. Terms of the deal were not disclosed but the price was reported as about USD $1-billion. Bank of America inherited First Republic from Merrill Lynch, which bought the private bank in 2007 for USD $1.7-billion.
• In December 2009, Bank of America repaid the U.S. government the USD $45-billion state aid it obtained under the Troubled Asset Relief Program. The bank raised USD $19.3-billion from a securities issue and funded the rest of the repayment from existing reserves.
• In May 2010, Bank of America sold its common and preferred share stake in Brazil's Itau Unibanco Holding for BRL 8.16-billion (USD $4.5-billion).
• In June 2010, Bank of America sold its 24.9% stake in Santander Mexico back to Banco Santander for USD 2.5-billion.
• In May 2011, Bank of America sold its remaining 7% stake in fund giant BlackRock back to BlackRock for USD $2.55-billion.
• In August 2011, Bank of America sold its Canadian credit card operations MBNA Canada to the Toronto-Dominion Bank for CAD $8.6-billion (USD $8.5-billion). Bank of America received CAD $7.5-billion in cash and removed CAD $1.1-billion of liabilities from its books. MBNA Canada had 1.8-million active MasterCard accounts.
• Also in August 2011, Bank of America sold half of its 10% stake in China Construction Bank to several institutional investors for USD $8.3-billion (CNY 52.96-billion, HKD $64.68-billion). Bank of America made about USD $3.3-billion from the sale.
• In August 2012, Bank of America Merrill Lynch sold its private banking operations outside of the United States to Swiss bank Julius Baer for CHF 860-million (USD $882-million) in stock and cash.  The division sold had USD $84-billion of assets under management. The purchase would make Bank of America a minority shareholder of Julius Baer.
• In December 2016, Bank of America sold its British credit card operations, MBNA Ltd. to Lloyds Banking Group for GBP 1.9-billion (USD $2.35-billion). MBNA has five million customers and over GBP 7.0-billion of receivables. 

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