By John Poirier
WASHINGTON (Reuters) - The proposed merger between Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) and mortgage lender Countrywide Financial Corp CFC.N is on track, a top U.S. banking regulator said on Wednesday.
"As far as I know the deal is still on track," Comptroller of the Currency John Dugan said at the Reuters Regulation Summit in Washington.
Dugan, who heads an agency that supervises some of the biggest U.S. banks, said the proposed merger helped calm markets uncertain about the ability of some mortgage lenders to weather the major downturn in the U.S. housing and credit markets.
"I do think that was a healthy thing that happened that helped calm markets about one particular significant area of uncertainty," Dugan said.
In January Charlotte, North Carolina-based Bank of America, whose flagship bank is regulated by the OCC, agreed to buy Countrywide in an all-stock transaction valued at about $4.5 billion based on Tuesday's closing prices.
Calabasas, California-based Countrywide is regulated by the Office of Thrift Supervision. Bank of America's holding company is regulated by the Federal Reserve.
Countrywide agreed to sell itself after delinquencies and foreclosures in its loan portfolio soared, and more than one in three borrowers with subprime mortgages fell behind on payments.
Both banks expect the merger to close in the third quarter although the SRM Global hedge fund, which has a 5.19 percent stake in Countrywide, has said it opposes the merger because the purchase price is too low.
Bank of America shares closed 4 cents lower at $42.33 and Countrywide stock ended 1 cent higher at $6.61 on the New York Stock Exchange.
With big stock price drops involving some U.S. banks and mortgage lenders, investors are wondering if the time might be right for merger and acquisition activity consolidation among banks.
Dugan said at the summit it is "hard to speculate" on bank mergers, which has been the trend over the long-term and could pick up after a quiet period.
"There are a lot of different factors at work," Dugan said. "On the one hand when you do have strains, that can lead to more mergers. On the other hand some of financing for mergers has dried up in the last year, although to be honestly private equity is never something that has driven bank mergers per se."
"I think we have a long-term trend toward more consolidation," he said. "There's been something of a pause on that in the last couple of years, (but) sure it's possible that that could pick up."
(For summit blog: summitnotebook.reuters.com/)
(Additional reporting Karey Wutkowsk; Editing by Tim Dobbyn, Gary Hill)
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