Bank of America is currently in negotiations to sell its prime brokerage unit to hedge fund giant Citadel, reports The New York Post.
Citadel has recently examined the books of the Bank of America’s prime brokerage business, according to sources close to the fund. However, It is not yet clear if a deal can be reached.
A number of senior executives at the Bank of America’s prime brokerage unit, which provides a number of services to hedge fund clients, have left in recent months. Christopher Pesce, the head of the unit, recently left the firm and Steven Winter, who looked after the fixed-income side of prime brokerage, has also gone.
The bank is also apparently looking to sell its public financing unit, which provides lending for city, state and local government projects.
In October 2007, CEO Ken Lewis claimed that the investment bank would be downsizing operations due to a sudden decline in earnings and increased mortgage-related write-downs.
Other recent departures have included Michael Meyer, head of investment-grade bond trading; Eugene Taylor, head of the corporate- and investment-banking unit; Gene Taylor, president of corporate and investment banking; and Peter Forlenza, global co-head of equities.
The prime brokerage unit, according to insiders, recorded about $310 million in net revenues last year and had roughly $20 million in operating income.