Borrowings and Deposits

v2.4.0.6

Borrowings and Deposits	3 Months Ended
	Mar. 31, 2012
Borrowings and Deposits [Abstract]
Borrowings and Deposits	Note 12. Borrowings and Deposits Prior to Merrill Lynch's acquisition by Bank of America, ML & Co. was the primary issuer of Merrill Lynch's unsecured debt instruments. Debt instruments were also issued by certain subsidiaries. Bank of America has not assumed or guaranteed the long-term debt that was issued or guaranteed by ML & Co. or its subsidiaries prior to the acquisition of Merrill Lynch by Bank of America. Beginning late in the third quarter of 2009, in connection with the update or renewal of certain Merrill Lynch international securities offering programs, Bank of America agreed to guarantee debt securities, warrants and/or certificates issued by certain subsidiaries of ML & Co. on a going forward basis. All existing ML & Co. guarantees of securities issued by those same Merrill Lynch subsidiaries under various international securities offering programs will remain in full force and effect as long as those securities are outstanding, and Bank of America has not assumed any of those prior ML & Co. guarantees or otherwise guaranteed such securities. There were approximately $6.0 billion of securities guaranteed by Bank of America at March 31, 2012. Following the completion of Bank of America's acquisition of Merrill Lynch, ML & Co. became a subsidiary of Bank of America and established intercompany lending and borrowing arrangements to facilitate centralized liquidity management. Included in these intercompany agreements is a $75 billion one-year revolving unsecured line of credit that allows ML & Co. to borrow funds from Bank of America at a spread to LIBOR that is reset periodically and is consistent with other intercompany agreements. This credit line was renewed effective January 1, 2012 with a maturity date of January 1, 2013. The credit line will automatically be extended by one year to the succeeding January 1st unless Bank of America provides written notice not to extend at least 45 days prior to the maturity date. The agreement does not contain any financial or other covenants. There were no outstanding borrowings under the line of credit at March 31, 2012. In addition to the $75 billion unsecured line of credit, there is also a revolving unsecured line of credit that allows ML & Co. to borrow up to $25 billion from Bank of America. Interest on borrowings under the line of credit is based on prevailing short-term market rates. The line of credit does not contain any financial or other covenants. The line of credit matures on February 12, 2013. At March 31, 2012, there was approximately $0.4 billion outstanding under the line of credit. Merrill Lynch Pierce Fenner & Smith Incorporated ("MLPF&S") also has the following borrowing agreements with Bank of America: • A subordinated loan agreement for approximately $1.5 billion - Borrowings under this agreement bear interest based on a spread to LIBOR, and have a scheduled maturity date of December 31, 2013. The loan agreement contains a provision that automatically extends the loan's maturity by one year unless Bank of America provides 13 months written notice not to extend prior to the scheduled maturity date. • A $7 billion revolving subordinated line of credit - The subordinated line of credit bears interest based on a spread to LIBOR, and has a scheduled maturity date of October 1, 2013. The revolving subordinated line of credit contains a provision that automatically extends the maturity by one year unless Bank of America provides 13 months written notice not to extend prior to the scheduled maturity date. At March 31, 2012, $1.1 billion was outstanding under the subordinated line of credit. • A $4 billion one-year revolving unsecured line of credit - Interest on the line of credit is based on prevailing short-term market rates. The credit line will mature on November 1, 2012 and may automatically be extended by one year to the succeeding November 1st unless Bank of America provides written notice not to extend at least 45 days prior to the maturity date. At March 31, 2012, there were no outstanding borrowings under the line of credit. • A $15 billion 364-day revolving unsecured line of credit - Interest on the line of credit is based on prevailing short-term market rates. The line of credit matures on February 19, 2013. At March 31, 2012, approximately $1.2 billion was outstanding under the line of credit. During the quarter ended March 31, 2012, Merrill Lynch completed a tender offer to purchase and retire certain subordinated notes for approximately $1.2 billion in cash, which resulted in a pre-tax gain of $328 million. On April 25, 2012, Merrill Lynch commenced a tender offer for the repurchase of certain outstanding subordinated debt securities. This tender is part of a broader tender with Bank of America and includes both Bank of America and Merrill Lynch subordinated debt. Bank of America and Merrill Lynch are offering to pay a total of up to $1 billion (such aggregate consideration is subject to increase). The Merrill Lynch securities included in the tender have an outstanding principal balance of $1 billion. Any repurchases pursuant to this tender offer are expected to be completed during the second quarter of 2012. The value of Merrill Lynch’s debt instruments as recorded on the Condensed Consolidated Balance Sheets does not necessarily represent the amount that will be repaid at maturity. This is due to the following: • As a result of the acquisition by Bank of America, all debt instruments were adjusted to fair value on January 1, 2009; • Certain debt issuances are accounted for at fair value and incorporate changes in Merrill Lynch’s creditworthiness (see Note 4); • Certain structured notes whose coupon or repayment terms are linked to the performance of debt and equity securities, indices, currencies or commodities reflect the fair value of those risks (see Note 4); and • Certain debt issuances are adjusted for the impact of fair value hedge accounting (see Note 6). The tables below exclude Merrill Lynch’s intercompany borrowings from Bank of America, see Note 2 for further information. Total borrowings at March 31, 2012 and December 31, 2011, which are comprised of short-term borrowings, long-term borrowings and junior subordinated notes (related to trust preferred securities), consisted of the following: (dollars in millions)   March 31, 2012     December 31, 2011 Senior debt $ 54,756     $ 59,583 Senior structured notes 29,470     28,523 Subordinated debt 10,911     12,661 Junior subordinated notes (related to trust preferred securities) 3,606     3,600 Other subsidiary financing 1,135     868 Debt issued by consolidated VIEs 11,728     11,534 Total $ 111,606     $ 116,769           Borrowings and deposits at March 31, 2012 and December 31, 2011, are presented below: (dollars in millions)   March 31, 2012     December 31, 2011 Short-term borrowings         Other unsecured short-term borrowings $ 1,218     $ 1,112 Short-term debt issued by consolidated VIEs(1) 4,700     4,939 Total $ 5,918     $ 6,051 Long-term borrowings(2)         Fixed-rate obligations(3) $ 56,673     $ 60,671 Variable-rate obligations(4)(5) 38,381     39,852 Long-term debt issued by consolidated VIEs(1) 7,028     6,595 Total $ 102,082     $ 107,118 Deposits         Non-U.S.  $ 12,538     $ 12,364           (1) See Note 9 for additional information on debt issued by consolidated VIEs. (2) Excludes junior subordinated notes (related to trust preferred securities). (3) Fixed-rate obligations are generally swapped to variable rates. (4) Variable interest rates are generally based on rates such as LIBOR, the U.S. Treasury Bill Rate, or the Federal Funds Rate. (5) Includes structured notes. See Note 5 for additional information on the fair value of long-term borrowings. The weighted-average interest rates for borrowings at March 31, 2012 and December 31, 2011 (excluding structured products) were as follows:   March 31, 2012     December 31, 2011 Short-term borrowings 0.3 %     0.4 % Long-term borrowings 3.9     4.0 Junior subordinated notes (related to trust preferred securities) 6.9     6.9 Merrill Lynch also obtains standby letters of credit from issuing banks to satisfy various counterparty collateral requirements, in lieu of depositing cash or securities collateral. Such standby letters of credit aggregated $1.7 billion and $2.1 billion at March 31, 2012 and December 31, 2011, respectively. Long-Term Borrowings At March 31, 2012, long-term borrowings mature as follows: (dollars in millions)   Amount   Percentage of Total Less than 1 year $ 21,717   21 % 1 – 2 years 22,615   22 2 – 3 years 15,969   16 3 – 4 years 2,757   3 4 – 5 years 5,375   5 Greater than 5 years 33,649   33 Total $ 102,082   100 % Certain long-term borrowing agreements contain provisions whereby the borrowings are redeemable at the option of the holder (“put” options) at specified dates prior to maturity. These borrowings are reflected in the above table as maturing at their put dates, rather than their contractual maturities. However, Merrill Lynch believes that a portion of such borrowings will remain outstanding beyond their earliest redemption date. The maturity of certain structured notes whose coupon or repayment terms are linked to the performance of debt and equity securities, indices, currencies or commodities may be accelerated based on the value of a referenced index or security, in which case Merrill Lynch may be required to immediately settle the obligation for cash or other securities. These notes are included in the portion of long-term debt maturing in less than a year. Senior and subordinated debt obligations do not contain provisions that could, upon an adverse change in ML & Co.’s credit rating, financial ratios, earnings or cash flows, trigger a requirement for an early payment, additional collateral support, changes in terms, acceleration of maturity, or the creation of an additional financial obligation. See Note 12 to the Consolidated Financial Statements contained in the 2011 Annual Report for additional information on Borrowings.