Wall Street banks fight for life

Barclays and Bank of America have withdrawn from talks to buy Lehman and the US government has refused to offer any financial help. In the absence of a buyer or government aid Lehmans faces insolvency and must file for bankruptcy protection. Following this, in a rather shocking turn of events, Bank of America is now in advanced talks to acquire Merrill Lynch (the next weakest US bank) for up to $45bn.

Wall Street is in turmoil tonight as Merrill Lynch rushed to find shelter in a $35bn-plus takeover by Bank of America and Lehman Brothers appeared to be running out of options to save itself from becoming the biggest victim yet of the credit crunch … BofA’s rapid U-turn, which saw it abandon talks to buy Lehman and turn to Merrill in the space of just a few hours, will throw the spotlight on Morgan Stanley and Goldman Sachs, which could soon become the only two independent investment banks in the US.

Quoted from FTInDepth.

Update: Bank of America bought Merrill Lynch for $50bn which valued ML at $29/share. Now there’s speculation as to which other banks may merge.

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