Lunchtime Links: Will Bank of America sell Merrill Lynch?

A rumour has begun circulating: Bank of America might need to sell Merrill Lynch.

It source appears to be John Carney, senior editor at CNBC, who pointed out yesterday that a sale of Merrill Lynch could be one way of raising the $50bn its said to need to cover mortgage losses.

Carney points out that Bank of America paid around $50bn to acquire Merrill, making it an obvious candidate for divestiture. The New York Post says B of A is thinking of selling its stake in China Construction Bank. But this would only raise $21bn.

Needless to say, a sale of Merrill Lynch would be massively disruptive and probably result in many thousands of job losses. In reality, however, it's unlikely.

BAML has just announced its second quarter results. They show total net revenues in the global banking and markets division falling 6% in the first half, versus the same period of 2010, while profits fell 11%.

This looks good compared to Citi - where revenues in securities and banking fell 18% and profits fell 40% over the same period.

More importantly, however, BAML is looking increasingly dependent on its global banking and markets division for its profitability. In the first six months of 2011, the bank as a whole made a loss of $6.7bn, while its global banking and markets business contributed a profit of $3.7bn. Merrill Lynch might be better off without Bank of America, but Bank of America would not necessarily be better off without Merrill Lynch.

Bank of America, Goldman Sachs and Morgan Stanley all fell to their lowest levels for two years yesterday. (Wall Street Journal)

Lloyds RBS and Barclays lost 6% of their value yesterday. (Guardian)

Bank shares bounce back up today. (Guardian)

Deutsche Bank, SocGen, RBS may need to boost capital after the stress tests. (Bloomberg)

Lloyds appears to have found a new head of its wholesale banking operations at RBS. (Bloomberg)

The eurozone is eyeing a bank tax to help bailout Greece. (Reuters)

If you thought 2011 was a problem for Europe, just wait for next year. (Macrobusiness)

I am sitting in a deeply disappointing FSA seminar on risk management. (DeusExMacchiato)