July 1, 2008 / 2:42 PM / in 9 years

Bank of America completes Countrywide buy

NEW YORK (Reuters) - Bank of America Corp (BAC.N) completed the acquisition of Countrywide Financial Corp on Tuesday, clearing the way for thousands of job cuts as the No. 2 commercial bank seeks to prove it can revive the largest U.S. mortgage lender.

<p>A Bank of America ATM location is seen in Somerville, Massachusetts May 5, 2008. REUTERS/Brian Snyder</p>

In January, Bank of America agreed to buy the troubled California-based lender, which helped fuel a housing boom that went bust when its risky sub-prime loans to borrowers began to fail, for about $4 billion in stock.

But Bank of America shares have fallen 40 percent since then, and at current prices the deal is worth about $2.5 billion.

Countrywide shareholders received 0.1822 of a Bank of America share for each Countrywide share.

After Countrywide posted a larger-than-expected first-quarter loss of $893.1 million in April, analysts called on Bank of America to drop the deal.

The bank has said it expects the acquisition to yield cost savings and allow it to expand its offerings to its customers. Last week, it said it expects to eliminate about 7,500 jobs over the next two years after completing the takeover.

A Bank of America spokesman said the bank was modifying at least $40 billion in troubled mortgage loans in the next two years to keep 265,000 customers in their homes.

The bank has also said it stopped originating sub-prime mortgages in 2001 and will not re-enter that line of business.

Reporting by Phil Wahba; editing by John Wallace

Our Standards:The Thomson Reuters Trust Principles.
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