First Republic buyout question raised

By Muralikumar Anantharaman

BOSTON (Reuters) - First Republic Bank, a small Merrill Lynch-owned bank that targets the wealthy, has been approached this year about the possibility of a management buyout, the bank's chief operating officer said on Tuesday.

"There surely have been people who have asked us about it, but that hasn't been anything we have pursued," Katherine August-DeWilde, First Republic's president and chief operating officer, told the Reuters Wealth Management Summit here.

August-DeWilde was answering a question on whether First Republic had at any time in the past year considered a management buyout to become independent again, given the troubles being faced by Merrill.

Merrill Lynch & Co MER.N bought First Republic, which offers wealth management services, last year for $1.8 billion in cash and stock. But the credit crisis forced Merrill to agree to sell itself to Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) last month in a deal valued then at $50 billion.

Asked if any outside investors have approached First Republic with a deal proposal, August-DeWilde said: "That's not something I can comment on."

Bank of America already has a big presence in wealth management through its $3.3 billion purchase of U.S. Trust from Charles Schwab Corp (SCHW.O: Quote, Profile, Research, Stock Buzz) in 2007.

But even before that deal was completed, U.S. Trust's top executive, Peter Scaturro, departed after reported clashes with Bank of America executives. The bank disputed such reports at the time.

Asked if First Republic had talked to Bank of America Chief Executive Ken Lewis yet, or if it had received any indication on whether it would be able to retain its autonomy, August-DeWilde said: "It's early days."

"We haven't talked to anybody from Bank of America yet. They'll get to us. We understand that they have a very well developed process of integrating companies. And they certainly have a lot on their plate and a lot bigger concerns than us right now," she said.

The First Republic COO said the firm had shown strong growth in assets and clients over the past year as it stayed away from riskier investments and its expansion across the United States bore fruit. She declined to give the firm's asset figures, saying they were included in Merrill's numbers.

August-DeWilde acknowledged that First Republic's most valuable assets were its employees.

"I can't imagine Bank of America won't want to do everything possible to ensure that we retain the value in this franchise. Merrill paid a very good price for it and not very long ago and we have only had a better year than they expected and we expected since then," she added.

(Editing by Richard Chang)