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While the colossal $43 billion merger of Bank of America and FleetBoston Financial has been called BofA's high-stakes bet that its future lies in consumer banking, the deal will also enable BofA to win a larger share of the syndicated loan market and - in an age when loans are often linked to the promise of other, more lucrative investment banking business - perhaps more debt underwriting mandates as well.
At first glance, the merger seems primarily a way for BofA to expand its consumer business, as it creates the largest consumer bank (ranked by deposits) in the US. And it is true that FleetBoston provides little boost to BofA on most underwriting league tables - it is a nonentity in most areas of debt, having reduced its investment banking ambitions years ago. Yet one area in which FleetBoston remains a formidable presence is syndicated loans, which is good news for BofA in that sector.
BofA, which is currently ranked second in syndicated loans so far this year with $140.7 billion in proceeds, now adds the business of seventh-ranked Fleet, which has $21.3 billion in proceeds so far this year. The combined bank would have a better-than-20% market share in the syndicated loan market, further cementing its dominance over rival Citigroup, which has done $117.5 billion in business so far this year.
To be sure, the...