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, 2012
Related Party Transactions [Abstract]  
Transactions with Bank of America
Note 2.  
Transactions with Bank of America
Merrill Lynch has entered into various transactions with Bank of America, including transactions in connection with certain sales and trading and financing activities, as well as the allocation of certain shared services. Details on amounts receivable from and payable to Bank of America as of September 30, 2012 and December 31, 2011 are presented below.
Receivables from Bank of America are comprised of:
(dollars in millions)
 
September 30, 2012

December 31, 2011
Cash and cash equivalents
$
11,016

 
$
7,491

Cash and securities segregated for regulatory purposes
5,243

 
6,107

Receivables under resale agreements
30,776

 
26,855

Trading assets
402

 
700

Net intercompany funding receivable
240

 
3,567

Other receivables
6,418

 
6,252

Total
$
54,095

 
$
50,972

Payables to Bank of America are comprised of:
(dollars in millions)
 
September 30, 2012
 
December 31, 2011
Payables under repurchase agreements
$
262

 
$
22,647

Payables under securities loaned transactions
2,957

 
2,519

Short-term borrowings
885

 
1,450

Deposits
110

 
75

Trading liabilities
99

 
503

Other payables
2,453

 
1,935

Long-term borrowings(1)
5,297

 
2,650

Total
$
12,063

 
$
31,779

 
 
 
 
(1)
Includes $2,578 of subordinated borrowings from Bank of America as of December 31, 2011 (see Note 12).
Total net revenues and non-interest expenses related to transactions with Bank of America for the three months ended September 30, 2012 were $324 million and $471 million, respectively. Such net revenues and non-interest expenses for the nine months ended September 30, 2012 were $821 million and $1,553 million, respectively. 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 $581 million, respectively. Such net revenues and non-interest expenses for the nine months ended September 30, 2011 were $822 million and $1,926 million, respectively. Net revenues for the three and nine months ended September 30, 2011 included investment banking revenues of $140 million and $210 million respectively, from transactions involving Bank of America. Similar activity for 2012 was not material.
Total net revenues related to transactions with Bank of America for the three and nine months ended September 30, 2012 included intercompany service fee revenues of $278 million and $650 million, respectively. Total non-interest expenses related to transactions with Bank of America for the three and nine months ended September 30, 2012 included intercompany service fee expenses of $356 million and $1,288 million, respectively. Total net revenues related to transactions with Bank of America for the three and nine months ended September 30, 2011 included intercompany service fee revenues of $153 million and $555 million, respectively. Total non-interest expenses related to transactions with Bank of America for the three and nine months ended September 30, 2011 included intercompany service fee expenses of $561 million and $1,793 million, respectively. Intercompany service fee revenue and service fee expense from Bank of America represents the allocations of certain centralized or shared business activities between Merrill Lynch and Bank of America. Such fees are generally determined in accordance with subsidiary transfer pricing agreements.
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 extendible one-year revolving credit facility that allows Bank of America to borrow funds from Merrill Lynch at a spread to the London Interbank Offered Rate ("LIBOR") that is reset periodically and is consistent with other intercompany agreements. The credit facility matures on January 1, 2013 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. There were no amounts outstanding at both September 30, 2012 and December 31, 2011 under this credit facility. There is also a short-term revolving credit facility that allows Bank of America to borrow up to an additional $25 billion. Interest on borrowings under the credit facility is based on prevailing short-term market rates. The line of credit matures on February 12, 2013. At September 30, 2012, there were no amounts outstanding under this credit facility. See Note 12 for further information on intercompany financing agreements with Bank of America. In addition, Bank of America has guaranteed the performance of Merrill Lynch on certain derivative transactions (see Note 6). Bank of America has also guaranteed certain debt securities, warrants and/or other certificates and obligations of certain subsidiaries of ML & Co. (see Note 12) and in certain instances the return of collateral posted by counterparties.