UPDATE 1-Bank of America completes Merrill Lynch purchase

NEW YORK, Jan 1 (Reuters) - Bank of America Corp (BAC.N) completed its purchase of Merrill Lynch & Co on Thursday, creating the largest U.S. bank and perhaps one of the biggest challenges yet for longtime Chief Executive Kenneth Lewis.

The closing allows Bank of America to bypass JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) in size, giving it about $2.7 trillion of assets.

Bank of America had said it expected to issue 1.71 billion common shares, equal to $24.1 billion, plus 359,100 preferred shares in the merger. Merrill shareholders received 0.8595 of a Bank of America common share for each of their common shares.

The transaction, originally valued at $50 billion, came to fruition in the early morning of Sept. 15, about an hour before Lehman Brothers Holdings Inc (LEHMQ.PK) went bankrupt, and may have saved Merrill from a similar fate.

It ends more than 94 years of independence for Merrill, after a year when the five top Wall Street banks were bought, went bankrupt, or changed their business structures.

Lewis is swallowing Merrill's "thundering herd" of 17,000 brokers, which he has called the "crown jewel" of the acquisition. He is also absorbing Merrill's big investment bank, which by volume ranked fifth in debt and equity underwriting and third in merger advice in 2008, Thomson Reuters data show.

The combined company's brokerage, credit card, investment banking, mortgage and wealth management operations, plus its deposit base, will make it the nation's largest or close to it.

Bank of America also takes over Merrill's nearly 50 percent stake in the powerful money manager BlackRock Inc (BLK.N).

"We are now uniquely positioned to win market share and expand our leadership position in markets around the world," Lewis said in a statement on Thursday.