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UPDATE 1-Bank of America assumes $16.6 bln Countrywide debt

Mon, Nov 10 2008, 12:28 GMT
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NEW YORK, Nov 10 (Reuters) - Bank of America Corp, the third-largest U.S. bank by assets, said on Monday that it had agreed to assume $16.6 billion of debt and guarantees of Countrywide Financial Corp, which it acquired in July.

Bank of America said the assumption was in connection with the transfer Friday by Countrywide and its Countrywide Home Loans unit of substantially all their assets and operations to the bank.

The bank disclosed the assumption in a regulatory filing.

In late April, Charlotte, North Carolina-based Bank of America had said it was examining options for Countrywide debt, estimated at around $40 billion, and that there was no assurance it would redeem, assume or guarantee the debt.

That prompted worries that holders of Countrywide debt that Bank of America did not take on would be exposed to higher risk of default.

Bank of America did not immediately return calls seeking comment.

Countrywide was the largest U.S. mortgage lender before Bank of America bought it for $2.5 billion on July 1. The bank last month said Countrywide added $259 million to third-quarter operating profit.

Bank of America expects by year-end to complete its acquisition of Merrill Lynch & Co, the Wall Street bank and brokerage.

Shares of Bank of America closed Friday at $20.49 on the New York Stock Exchange. They are down 50 percent this year.

(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn) Keywords: BANKOFAMERICA/COUNTRYWIDE DEBT

(jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)

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