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Bank of America CEO Ken Lewis
Ken Lewis, the CEO of Bank of America, will retire at the end of the year. Photograph: Nicholas Kamm/AFP
Ken Lewis, the CEO of Bank of America, will retire at the end of the year. Photograph: Nicholas Kamm/AFP

Ken Lewis, chief executive of Bank of America, to step down

This article is more than 14 years old
Beleaguered boss of America's biggest high street bank to retire at the end of the year

Ken Lewis, the beleaguered boss of Bank of America, is to step down at the end of the year, ending speculation over his future following a highly controversial deal to buy the brokerage Merrill Lynch.

America's biggest high street bank announced on Wednesday evening that Lewis, 62, will retire as chief executive and as a director, with effect on 31 December. No successor was named.

A veteran of the financial services industry, Lewis has worked for the North Carolina-based bank for 40 years and has held the top job since 2001. But he has faced harsh criticism on Wall Street over decisions to shell out billions on the troubled mortgage lender Countrywide Financial and the struggling brokerage Merrill Lynch.

Lewis told staff that he had decided it was "time to begin to transition to the next generation of leadership". He said Bank of America was "well positioned" to meet economic and market challenges, adding: "I am particularly heartened by the results that are emerging from the decisions and initiatives of the difficult past year-and-a-half."

The decision was a U-turn for Lewis, who had previously said he wanted to stay in the job until he was 65 or until Bank of America repays its $45bn in emergency aid from the government.

Shareholders have been pushing for change. Unhappy with Lewis's leadership during the financial crisis, dissident investors voted to strip him of the title of chairman at Bank of America's annual meeting in April.

Dissent has focused on the bank's $50bn (£31.2bn) deal to buy Merrill Lynch, which Lewis negotiated at lightening speed over a weekend in September last year when another Wall Street brokerage, Lehman Brothers, was sliding into bankruptcy.

As losses quickly mounted at Merrill, the purchase went awry. Lewis has admitted that he considered pulling out of the takeover but that the then treasury secretary, Henry Paulson, put pressure on him to complete it.

As the Merrill acquisition weakened its finances, Bank of America was obliged to accept bailout funds from the US treasury. The bank's shares have halved since it bought Merrill.

The Securities and Exchange Commission and New York's attorney general, Andrew Cuomo, are investigating whether Bank of America misled its shareholders over the takeover. There was particular outrage when it was disclosed that Merrill distributed $3.6bn in bonuses to its employees despite losses of $15bn in three months.

Analysts expressed surprise that he was bowing out after withstanding pressure for many months. "He had fought to stay. It's just very odd," said Nancy Bush, a banking expert at NAB Research. "Number one, like everyone else, I'm glad to see this drama over. Number two, this company has really been dealt some blows in the past year and I think this is going to be another blow."

Bank of America is the largest commercial bank in the US in terms of deposits. It has 6,100 branches and operates in 150 countries.

Lewis joins a list of bank bosses to vacate their offices since the credit crunch began to bite. Citigroup, Merrill, Switzerland's UBS and Britain's Royal Bank of Scotland have all parted company with their chief executives.

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