World Economic

Bank of America Corp has struck a deal to sell a long-term asset management business, part of its Columbia Management division, to Ameriprise Financial Inc for about $1 billion.

The bank said on Wednesday it expects to close the sale of the unit, which had $165 billion in equity and fixed income assets under management at the end of June, next spring for between $900 million and $1.2 billion.

Bank of America said it is still considering alternatives for the short-term asset management business at Boston-based Columbia.

The deal will push Ameriprise above $400 billion in assets under management, making it the eighth-largest U.S. mutual fund manager, with a global presence, Ameriprise Chief Executive Jim Cracchiolo told Reuters in an interview.

Bank of America has sought to sell its Columbia division since earlier this year. It has had to raise capital to offset losses on mortgages and other loans.

Cracchiolo said the bidding for Columbia began in April and was an “auction-type process” involving several rounds of bidding.

He said Bank of America initially offered for sale all of Columbia, but backed away from that approach during the bidding, instead resolving to sell only the long-term asset management division.

“That’s what we really wanted to complement our business,” he said.

A Bank of America spokesman did not dispute Cracchiolo’s description of the bidding process but declined to comment further.

Asset manager BlackRock Inc had been interested in buying pieces of Columbia, according to some media reports, but in June the New York-based company acquired British bank Barclays Plc’s investment arm BGI for $13.5 billion.

Charlotte, North Carolina-based Bank of America inherited a stake in BlackRock through the January 1 acquisition of Merrill Lynch.

Bank of America shares were down 27 cents, or 1.6 percent, to $16.89 in morning trading. Ameriprise was up $3.33, or 10.3 percent, at $35.67.

(Reporting by Elinor Comlay and Joe Rauch; Editing by John Wallace)

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