BofA to pursue ‘organic’ growth strategy

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Ken Lewis, Bank of America chief executive, on Wednesday said he planned to pursue organic growth in the mortgage business.

Mr Lewis’s remarks followed recent reports that BofA had entered early deal talks with Countrywide Financial, the largest US home lender.

The talks, first reported by the Financial Times last week, could lead to a joint venture between the two companies or a merger. They could also end with no agreement.

Speaking about the mortgage business at a Citigroup conference on Wednesday, Mr Lewis said: “We have said, unequivocally, that our strategy is one of organic growth...We have said we’re not particularly interested in the wholesale and correspondent business. Finally, we’ve said we like the product but don’t like the business.”

He added that BofA has had a poor track record with joint ventures.

Shares in Countrywide, which have risen since the FT report, initially fell following Mr Lewis’s remarks. But they quickly recovered, and finished flat at $43.48 as analysts suggested the comments could be seen as an effort to restrain the shares of a potential target.

“I have no doubt that [Mr Lewis] would like to acquire Countrywide,” said Dick Bove, analyst at Punk Ziegel. “If he said anything indicating that interest, Countrywide shares would be up another 5 per cent.”

Speaking later at the conference, Angelo Mozilo, Countrywide chief executive, said he had a strong “emotional attachment” to the company he helped found. But he would continue to evaluate all options.

He said: “Bottom line is: my continuous job is to make sure I enhance shareholder value. I have to, in conjunction with the board and the rest of the management team, make that decision on a continuous basis despite my emotional attachment to the company...We have to see what happens.”

In other comments, Mr Lewis said there was a low probability BofA would make a big bank acquisition.

BofA is close to the 10 per cent cap on consumer deposits that any US bank can control after an acquisition Mr Lewis has said the bank will not lobby aggressively to have the cap lifted.

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