Berkshire Hathaway increases Bank of America shares in its portfolio
American corporation Berkshire Hathaway bought back the Bank of America shares in the amount of 34 million securities. The deal amounted to $800 million, which allowed Warren Buffett to acquire an 11.3% stake in one of the largest financial institutions in the United States.
Bank of America is the second largest bank in the country. Berkshire Hathaway Holding planned to expand its stake in this institution back in 2018, when it applied to the Federal Reserve to purchase papers. The revision was made possible by the fact that the assets of the company famous businessman Warren Buffett overcome the level of ownership of 10%, which is the main factor for the regulator. After the Federal Reserve issued the permit, the corporation started the process of purchasing the bank’s securities.
This acquisition was quite unexpected, especially given the fact that recently Berkshire Hathaway has reduced its investment in major U.S. banks, including JPMorgan and Goldman Sachs. Recently, the corporation got rid of a number of BNY Mellon assets by selling about 31 million shares of the financial institution.
Bank of America, as it is now known, was formed in 1998 after the acquisition of Nations Bank. However, the history of the financial conglomerate began in 1904, when a descendant of immigrants Amadeo Giannini decided to create the Bank of Italy in San Francisco. After a while, this institution became known as the Bank of America and belonged to its founder company – Transamerica Corporation. Thanks to a prudent approach to management and orientation towards middle income people, the bank was actively developing. In 1936 the Bank of America took the fourth place in the U.S. in terms of assets, and during the Second World War, it doubled its profits and by 1945 became the largest bank not only in the country but also in the world.
In 1958, the institution began issuing credit cards, which was a great success. They laid the foundation for modern VISA cards. Already from 1961 all banking processes have become computerized.
In the 70’s the institution experienced a crisis, the strongest in its history. As a result of overdue agricultural loans to third world countries, the Bank of America’s profits fell sharply, and had to close about 187 branches and reduce the number of people. By 1987, the Bank was able to restore full activity and increase profits.
In 2011, there was a decrease in revenue and measures were introduced to optimize business processes. At the same time the company got rid of a number of assets, including 13 billion securities of China Construction Bank.