Quarterly report pursuant to Section 13 or 15(d)

Transactions with Bank of America

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Transactions with Bank of America
 9 Months Ended
Sep. 30, 2011
Transactions with Bank of America [Abstract]  
Transactions with Bank of America
 
Note 2.  Transactions with Bank of America
 
Merrill Lynch has entered into various transactions with Bank of America, primarily to integrate certain activities within either Bank of America or Merrill Lynch. Transactions with Bank of America also include various asset and liability transfers and transactions associated with intercompany sales and trading and financing activities.
 
Merger with BASH
 
See Note 1 — “Merger with Banc of America Securities Holdings Corporation (“BASH”)” for further information on this transaction.
 
Other Related Party Transactions
 
Merrill Lynch has entered into various other transactions with Bank of America, primarily in connection with certain sales and trading and financing activities. Details on amounts receivable from and payable to Bank of America as of September 30, 2011 and December 31, 2010 are presented below:
 
Receivables from Bank of America are comprised of:
 
                 
(dollars in millions)   September 30, 2011   December 31, 2010
 
 
Cash and cash equivalents
  $ 6,707     $ 14,471  
Cash and securities segregated for regulatory purposes
    7,405       5,508  
Receivables under resale agreements
    29,106       31,053  
Trading assets
    1,475       643  
Net intercompany funding receivable
    9,264       7,305  
Other receivables
    1,701       1,460  
Other assets
    -       215  
                 
Total
  $ 55,658     $ 60,655  
                 
 
Payables to Bank of America are comprised of:
 
                 
(dollars in millions)   September 30, 2011   December 31, 2010
 
 
Payables under repurchase agreements
  $ 20,210     $ 12,890  
Payables under securities loaned transactions
    2,359       2,352  
Short-term borrowings
    2,395       1,901  
Deposits
    90       33  
Trading liabilities
    2,334       520  
Other payables
    3,620       2,746  
Long-term borrowings(1)
    2,579       2,579  
                 
Total
  $ 33,587     $ 23,021  
                 
 
 
 
(1) Amounts are subordinated borrowings from Bank of America (see Note 12).
 
Total net revenues and non-interest expenses related to transactions with Bank of America for the three months ended September 30, 2011 were $288 million and $537 million, respectively. Such revenues and expenses for the nine months ended September 30, 2011 were $822 million and $1,766 million, respectively. Total net revenues and non-interest expenses related to transactions with Bank of America for the three months ended September 30, 2010 were net losses of $111 million and expenses of $365 million, respectively. Such revenues and expenses for the nine months ended September 30, 2010 were net losses of $100 million and expenses of $816 million, respectively. Non-interest expenses for the three and nine months ended September 30, 2011 reflect increased intercompany service fees resulting from the integration of Bank of America’s and Merrill Lynch’s methodologies for allocating expenses associated with shared services to their subsidiaries. The results for the nine months ended September 30, 2011 and September 30, 2010 included gains of $5 million and $282 million, respectively, from the sale of approximately $3.7 billion and $11.2 billion, respectively, of available-for-sale securities to Bank of America. These transfers were made to enable Bank of America or its non-Merrill Lynch subsidiaries to more efficiently manage the existing portfolio of similar available-for-sale securities.
 
Bank of America and Merrill Lynch have entered into certain intercompany lending and borrowing arrangements to facilitate centralized liquidity management. Included in these arrangements is a $50 billion one-year revolving line of credit that allows Bank of America to borrow funds from Merrill Lynch at a spread to LIBOR that is reset periodically and is consistent with other intercompany agreements. The line of credit matures on January 1, 2012 and will automatically be extended by one year to the succeeding January 1st unless Merrill Lynch provides written notice not to extend at least 45 days prior to the maturity date. Approximately $7.1 billion and $6.1 billion were outstanding under this line of credit as of September 30, 2011 and December 31, 2010, respectively. In addition, in October 2011, Merrill Lynch entered into a short-term revolving credit facility that will allow Bank of America to borrow up to an additional $25 billion. For information on Merrill Lynch’s other borrowing arrangements with Bank of America, including Bank of America’s guarantees of certain debt securities, warrants and/or other certificates and obligations of certain subsidiaries of ML & Co., refer to Note 12. Bank of America has also guaranteed the performance of Merrill Lynch on certain derivative transactions (see Note 6).