Somewhere, Hugh McColl is laughing

Looks like the financial world is moving South:

	The 60-story Bank of America Corporate Center towers over the bustling Charlotte N.C. skyline.
	Bob Leverone, Associated Press
	Hugh McColl, chief executive officer of NationsBank, relaxes in the corporate offices in Charlotte, N.C.. In 1998, BankAmerica Corp., agreed to merge with NationsBank Corp. to create one of the biggest banks in the nation, Bank of America.
	ALSO IN THE SERIES Day Two: How Charlotte's two dominant banks pervade all aspects of life in this fast-growing city. Day Three: Charlotte is a major attraction for former Pittsburghers moving there for job opportunities. Web Extra: A conversation with former Bank of America CFO Jim Hance about the rise of Charlotte

Bank of America plans $46bn deal for Merrill Lynch

By James Quinn, Wall Street Correspondent

Bank of America (BoA) has turned its attention to a possible $200bn (£111bn) merger with Merrill Lynch after pulling out of talks to save Lehman Brothers.

BoA, America's largest bank with a market value of $154bn (£85.9bn), is in early-stage merger discussions with Merrill about creating a financial conglomerate which, if the two were to combine, would become the world's biggest bank.

BoA is believed to be willing to pay between $25-30 a share for Merrill, valuing the bank, whose shares closed at $17.05 on Friday night, in the region of $38-46bn.

The talks could also act as a trigger for other interested parties to enter the fray, with Merrill rivals Goldman Sachs and Morgan Stanley both likely to be interested in at least some of its assets.

It is understood that discussions surrounding the possible merger of BoA and Merrill began as a result of the weekend's conversations led by 100 regulators and senior bankers at the Federal Reserve Bank of New York's headquarters in downtown Manhattan.

BoA began negotiations with Merrill on Sunday morning, not long after it indicated it no longer had any interest in purchasing Lehman's assets.

The combination would be a smart move for Merrill chairman John Thain, who has looked on at the pain inflicted on Lehman over the weekend in horror, and is only too aware that after Lehman, Merrill is the smallest of the large brokerages on Wall Street.

Merrill has not been without its problems, having written off in the region of $50bn of mortgage-related assets and leveraged loans since the start of the credit crisis 13 months ago.

On Friday, investors continued to sell-off Merrill's shares, which lost more than a third of their value last week on fears over its capital levels.

The two banks would make a sound strategic fit, combining BoA's strength in retail markets with Merrill's strengths in investment banking and private client broking.

BoA chairman Ken Lewis has long been interested in providing the bank with some form of investment banking presence, but attempts to do organically have not always been successful.

In October 2007, Mr Lewis said he had' "all the fun" he could stand in investment banking after profits in that division fell by 93pc amid sub-prime related write-downs.

But he is thought to have coveted Merrill from a far for some time, aware of the compelling offering that combining the two banks could make.

If the deal were to go ahead, it would mark the second major transaction BoA has undertaken during the credit crisis, having stepped in to rescue troubled mortgage lender Countrywide last year.

Spokesmen for both banks declined to comment.