BANK OF AMERICA ANALYSIS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

Calpers is looking forward to acquire Bank of America. Calpers is a company that provides customer services such as providing health and pension benefits to 1.6 million retirees, their families and employees. The company is providing those kinds of services through which it can manage the financial securities of its associated people. The company has been managing the largest public services fund till the 31^stof March of 2013 in the United States.

On the other hand, the bank that is being acquired by Calpers is the Bank of America. This bank has been operating successfully providing many services to the large corporations, small businesses, individual consumers and large financial institutions. The company is providing services related to asset management, banking and investing. Apart from that the bank is also providing financial risk management products which are also known as the derivatives to hedge the risks.

HISTORICAL PERFORMANCE OF BANK OF AMERICA

Bank of America is the second largest company in terms of the assets held by the company in United States. Around 13% of deposits were held by this bank in the year 2009 in United States. Bank of America is also one of the biggest banks of United States. The other three banks are its main competitors in the banking industry and these are JP Morgan, Wells Fargo and Citigroup.

Soon after the company was born, it started to make many acquisitions of companies. The company first acquired the U.S Trust Corporation in 2007. This acquisition was a very strong strategic move by the company to gain a competitive edge in the wealth-management business. After this, the company had then announced the acquisition of Merrill Lynch and Co, Inc. This was in September 2008. The company had also received about $118 billion in guarantees and also receive amount of $20 billion in government aid against the bad assets that the bank of America had acquired.

The bank’s financial performance has been increasing over the period of time. If we analyze its ratios from the annual report of 2013, the return on average assets has been increasing over the period of five years from 2009. Apart from that, there is also growth in return on assets ratio. The company is paying constant dividends of $ 0.04 per share to its equity holders. This shows that the company is not changing its dividend policy and that it is paying stable dividends which are ultimately increasing the share price of the company due to higher demand. Also the net interest earned by the bank on earning assets has increased from 2012 to 2013 by 0.17%.

Bank of America has always placed emphasis on the values of the stakeholders. These values of the company which have been developed over the period of time have been transformed into a formal code of conduct. All the people working for this organization are required to meet these code of conduct. Other stakeholders include the banks customers, investors, clients, community organizations and regulators.The company engages these all stakeholders in the activities of the company through shareholder meetings and also through community rights, public policy, development and social environment areas. The company’s historic performance shows immense growth and also great potential. Today in 2014 the company has a market capitalization of $ 178.33 billion.

CORPORATE GOVERNANCE AND THE CODE OF CONDUCT

The corporate governance system of Bank of America has been designed in a way to provide fairness, transparency and accountability across all the business activities and operations of the bank. The company’s directors to the employees are all committed to promote responsible and ethical business. In 2014, a separate corporate social responsibility committee was formed. This committee managed all the concerns related to corporate social responsibility issues. As soon as this committee finds any issues related to the corporate governance system of the bank, the committee reports it to the CEO of the bank and also provide recommendations for overcoming those issues.

This team is being managed by the Consumer Policy Executive and Global CSR. These both are responsible to ensure that the bank is achieving the CSR strategy and also engaging its stakeholders in these issues. The company has always done the business through the right way to provide value to the shareholders, customers and the clients. The management structure of the organization ensures that the bank is complying with the regulations and with all the laws. The company has also set up clear lines of accountability, fairness and decision making.

The company also has a unique corporate culture. It is the responsibility of each director and the associates to sustain the company’s corporate culture. The company had transformed its values which it had developed over the period of time into specific code of conducts. These codes of conduct should be promoted aggressively to all the...................

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