Some of the bank’s wealthy customers are reported to have said that they’d like to see the bank become independent once again. First Republic 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 legendary 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. 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.
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 possible suitors such as Goldman Sachs and Morgan Stanley. In December 2008, Goldman Sachs, an erstwhile investment bank, received approval to convert its existing New York limited purpose trust company to a New York State-chartered full-service bank. The acquisition of First Republic Bank would help Goldman Sachs to increase its scale in wealth management business. Similarly Morgan Stanley would also gain scale and also find synergies through First Republic Bank acquisition. In January 2009, Morgan Stanley bought a 51% stake in Smith Barney, Citigroup wealth management arm.
Though the deal may be a win-win situation for the seller, acquirer, and the customers, nothing is concrete as yet. BofA’s spokesman Robert Stickler said the company is yet to decide which Merrill holdings are non-core. According to people who are close to Bank of America, executives are examining noncore assets and noncore businesses, looking for any that are no longer strategic fits. Mr. Stickler denied that a companywide review is under way, but acknowledged that executives are trying to reduce the size of the company's balance sheet. One possibility is that certain trading assets could be sold.
BofA’s Chairman and Chief Executive Kenneth Lewis has said the company can ride out the financial crisis and doesn't need government aid beyond the $45 billion it already has received. So the other alternative to government aid is certainly non-core asset sale.
