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New York - Bank of America chief executive Kenneth Lewis, at the center of a storm over a government-backed deal to buy Merrill Lynch last year, announced plans to retire December 31.
Lewis, who had lost the post of chairman earlier this year at an angry shareholder meeting, "notified the board of directors of his decision to retire, effective December 31, 2009," the company said in a statement on Wednesday.
"The board will continue ongoing planning to ensure his successor is selected by that date. Lewis will retire as CEO and as a director."
Lewis, who heads the largest US banking group by assets, said "Bank of America is well positioned to meet the continuing challenges of the economy and markets".
"I am particularly heartened by the results that are emerging from the decisions and initiatives of the difficult past year-and-a-half," he added.
Lewis had provoked shareholders' anger by acquiring Merrill Lynch without informing them of the investment bank's massive losses.
It later emerged that Lewis had been pressured to complete the purchase of the firm for fear of a further blow to a fragile financial system.
Lewis told a congressional hearing that he concluded the deal because if Bank of America backed away, "the government could or would remove management and the board".
But asked specifically if he were "pressured," Lewis replied: "It's hard to find the exact right word to describe what I just described."
Henry Paulson, who was Treasury chief when the deal was sealed, acknowledged he had urged Lewis not to back away from Merrill.
Paulson "intended to deliver a strong message reinforcing the view... that it would be unthinkable that Bank of America take this action for which there was no reasonable legal basis and which would show a lack of judgment," a Paulson spokesperson said.
Congress opened an inquiry after documents released by New York state Attorney General Andrew Cuomo indicated that top US Treasury and Federal Reserve officials threatened to push out bank management and board members if the takeover were not completed.
The banking giant also faces litigation over bonuses paid to Merrill executives just before the takeover was finalised.
Bank of America had reached a deal with the Securities and Exchange Commission to pay a penalty of $33m to the authorities "for misleading investors" on R3.6bn in bonuses.
But a federal judge rejected the plan, saying it penalised the shareholders who were victimised, and failed to shed light on what happened.
Regulators were ordered to bring the case to trial, and said last week that new charges could be filed.
Merrill Lynch's payment of cash bonuses on December 29, just ahead of the finalisation of its acquisition by Bank of America on January 1, sparked an outcry in the United States over executive compensation, particularly involving firms bailed out by the government.
Bank of America had received $20bn in federal aid to help it acquire the nearly bankrupt firm. The bank also received $25bn in government capital under the Troubled Asset Relief Programme to shore up the banking system.
Lewis said he was leaving the bank in solid condition.
"We are in position to begin to repay the federal government's Tarp investments," he said. "For these reasons, I decided now is the time to begin to transition to the next generation of leadership at Bank of America."
- AFP
/hr
