Bank of America's planned $43-billion acquisition of FleetBoston quickly drew some negative reaction last week.
A flurry of analysts derided it. Bank of America shareholders, apparently thinking the price was too high, dumped shares of their bank's stock en masse.
One of the few neutral observers to defend the deal was longtime banking analyst Dick Bove in St. Petersburg. He reasoned shareholders should be happy because they will benefit in the long run by owning a piece of the biggest consumer bank - by far - in the country.
But Bove's support of the deal didn't sound too, well, supportive.
Bank of America should have spent its money in an area like investment banking where profits are rising instead of retail banking, which is at the peak of its profit cycle, he said. Moreover, if Bank of America really wanted to buy another retail bank, FleetBoston wasn't the best choice. And now, with Bank of America's market share of U.S. deposits hovering near the 10 percent limit, it's prohibited from making another big deal.
"I think that they bought the wrong company," Bove concluded. "If I had my preference, I would have gone in a different direction."
