Profits rise at Bank of America
US’s largest bank posts better than expected results but says “challenges” lie ahead.
The news comes as business software giant Oracle said on Monday it would buy technology firm Sun Microsystems for $7.4bn.
Executive pressure
Business analysts say Bank of America’s better than expected results could take some pressure off Ken Lewis, the firm’s chief executive, who has faced calls from some shareholders to either give up his job as chairman or be removed.
Lewis was criticised this year over the purchase of investment banking firm Merrill Lynch, which closed on January 1, after shareholders approved the deal only to learn later it had suffered huge losses that prompted a government bailout.
“We understand that we continue to face extremely difficult challenges,” he said in a statement after the release of the results.
Bank of America’s improved profit is the latest in a string of bank earnings that have beaten expectations, including JPMorgan Chase and Citigroup.
The firm received $45bn in government funds as part of the US treasury department’s $700bn financial bailout package last year.
Job concerns
Oracle’s bid to buy Sun Microsystems, which comes after Sun reportedly rejected a takeover bid from computer giant IBM, will boost Oracle, the number two software firm, by giving it Sun’s popular Java programming language and Solaris operating software for computer servers.
Sun’s board of directors have unanimously approved the deal which is expected to close this year depending on approval from the company’s stockholders and US federal regulators.
Oracle did not say whether the acquisition would lead to job losses – the firm currently employs about 86,000 people worldwide while Sun has about 33,000 employees.