BofA committed to Countrywide, dividend, M&A unit

By Joseph A. Giannone and Jonathan Stempel

NEW YORK/BANGALORE (Reuters) - Bank of America Corp (BAC.N) Chief Executive Kenneth Lewis said on Wednesday he remains committed to buying money-losing mortgage giant Countrywide Financial Corp CFC.N, but acknowledged the nearly year-long global credit crisis still has "a ways to go."

Lewis also reaffirmed his support for the investment banking business, after indicating last year he was losing patience with uneven results from the division.

Lewis said the $3.1 billion Countrywide purchase was an important strategic move, giving Bank of America more than a 20 percent share of a large marketplace. It also remains a financially attractive deal, he said, even with credit and legal costs that may top $10 billion.

"We think we've got it right," he said of the takeover deal, speaking at a Wall Street Journal conference. "We still have room to make it a financially attractive transaction."

While many consumer advocates, lawyers and politicians have criticized the merger and Countrywide lending practices, Lewis said this has not prompted him to walk away. The No. 2 U.S. commercial bank expects a third-quarter closing for the deal.

The bank also intends to stand by its dividend payout, responding to a Wednesday note from Oppenheimer & Co analyst Meredith Whitney, who said the Charlotte, North Carolina-based bank viewed its 64 cent-a-share dividend as "safe."

Bob Stickler, a bank spokesman who dined with Lewis and Whitney on Tuesday, said Lewis did not at the dinner use the word "safe" to characterize the dividend, which offers an 8.6 percent yield. The bank raised its dividend 30 straight years.

"Ken discussed a number of scenarios in which not cutting the dividend was seen as most likely," Stickler said.

Several large U.S. banks, including Citigroup Inc (C.N), Wachovia Corp WB.N and Washington Mutual Inc (WM.N), have slashed dividends this year to preserve capital as write-downs and loan losses soared.

In New York Stock Exchange trade, shares of Bank of America fell 2.6 percent to $28.85, its lowest in five and a half years. Countrywide plunged 6 percent to $4.58.

CRISIS HAS "A WAYS TO GO"

Countrywide lost $2.52 billion in the nine months ending in March. Its financial and legal woes have led many investors to question whether Bank of America would go through with the takeover.

Last month, the bank in a regulatory filing said it might not assume all Countrywide debt, raising doubts.

The all-stock deal valued Calabasas, California-based Countrywide on Tuesday at about $5.40 per share. Countrywide shares closed 10 percent below that level, reflecting lingering skepticism that a deal will get done.

Shareholders of Countrywide are scheduled to vote on the merger on June 25.