Bank of America CEO makes his company huge

By Jonathan Stempel

NEW YORK (Reuters) - Maybe Kenneth Lewis, the chief executive of Bank of America Corp, could also be called "Huge" -- the nickname given to his deal-hungry predecessor.

The decision by Lewis to double down on a flailing U.S. mortgage sector by paying $4 billion for Countrywide Financial Corp is both a bet on a recovery for U.S. housing, and a signal the second-largest U.S. bank can ride out the global credit crisis.

In dollars, the Countrywide acquisition does not appear big -- certainly not for Lewis, who has spent well over $100 billion on acquisitions and investments in other companies since 2004.

But it carries big risks. Among them: the extent of loan losses in a housing environment that might stay decrepit past 2008, and the outcomes of a blizzard of lawsuits over Countrywide's alleged loose lending practices.

Lewis' appetite for mergers mirrors that of Hugh McColl, his fiery predecessor. McColl was known as "Huge" for his deal making, including the $43.1 billion purchase in 1998 of BankAmerica by his NationsBank, which created Bank of America.

In buying a fixer-upper such as Countrywide just three months after spending $21 billion to buy the Midwestern bank LaSalle Bank Corp, Lewis might have earned the same title.

"For goodness sake, B of A has gone from a minor regional bank into one of the largest banks in the country," said Sean Egan, managing director of Egan-Jones Ratings Co. "Lewis has been in the top 10 percent in the banking industry at integrating acquisitions."

PLETHORA OF DEAL MAKING

Running a bank with more than 6,100 branches, $1.7 trillion of assets and one of every 10 U.S. dollars on deposit seems a world away from the city of Meridian, Mississippi, current population 38,200, where Lewis was born on April 9, 1947.

Armed with a finance degree from Georgia State University, Lewis joined Bank of America predecessor NCNB Corp in 1969 as a credit analyst. He rose through the ranks, becoming Bank of America's chief executive in April 2001.

At first, Lewis lay low on the deal front. That changed when he agreed to shell out $48 billion for northeast regional bank FleetBoston Financial Corp. Nearly everyone with an opinion at the time thought Lewis overpaid. Yet that purchase, which closed in April 2004, is now considered a success.

Next came Lewis' June 2005 agreement to pay $3 billion for a 9 percent stake in China Construction Bank Corp, the largest foreign investment in China's banking sector. That stake is now worth some $18 billion.

Two weeks later came the purchase of credit card issuer MBNA Corp, a $34.6 billion merger that closed at the start of 2006. That purchase looked good at first, but the jury may still be out in 2008 if credit losses continue.

The year 2007 brought the $3.3 billion purchase in July of the U.S. Trust Corp private banking unit from Charles Schwab Corp and the purchase of LaSalle three months later from Holland's ABN AMRO Holding NV. Yet another purchase, for a stake in Sallie Mae, did not happen because a private equity-led buyout of the student lender broke down.

CULTURE SHOCK