Bank of America Corp. is in talks with regulators to transfer about $50 billion of its derivatives business from its Irish unit into its U.K. operation, two people with knowledge of the matter said.
It’s part of a move to centralize and book trading activities in one place, said the people, who asked not to be identified because the details are private. The plan requires regulatory approval, one of the people said.
The Merrill Lynch International Bank Ltd. operation, which is based in Dublin and started in 1995, is among 21 overseas-owned banks to have full Irish banking licenses, according to central bank data. Bank of America Chief Executive Officer Brian T. Moynihan has spent three years cleaning up after his predecessor’s takeover of Countrywide Financial Corp. and Merrill Lynch & Co., divesting more than $60 billion of assets in the process.
The Financial Times newspaper, which reported the move by Bank of America earlier today, said the transfer of assets and the revision of client contracts won’t be completed until end of the year.
MLIB had $591.6 billion of assets at the end of 2011, according to its most recent filing with the Irish companies registry office. That’s almost three times the size of the country’s largest domestic lender Bank of Ireland Plc’s 159.8 billion-euro ($214.9 billion) balance sheet.
The firm’s MLIB unit is regulated by the Central Bank of Ireland and provides swaps and over-the-counter derivatives mainly with third-party institutions.
The plan may “be driven in part by internal tax considerations,” John Bruton, chairman of the International Financial Services Centre, which promotes Ireland as a location for financial services, said in an interview on Bloomberg Television. “Losses in the U.K. are more easily set off against profits in the U.K.”
Officials at Bank of America and the Central Bank of Ireland declined to comment on the FT report.