January 12, 2008	Saturday	Muharram 02,1429

NEW YORK, Jan 11: Bank of America said on Friday it was buying struggling Countrywide Financial in a four-billion-dollar deal that rescues the nation's largest mortgage lender amid a housing crisis.

The deal eased fears of collapse of the largest player in the troubled US mortgage market that could have sent shock waves through the world's biggest economy.

Bank of America offered 0.1822 of its own shares for each Countrywide share, according to a statement from the number-one US bank by stock market share value.

Analysts said that would put Countrywide's share value at $7.16, a 7.6 per cent discount to its closing price Thursday of $7.75.

Countrywide’s woes had reflected the troubles of the overall US housing market as the big lender had been hit by the meltdown in real estate, especially the subprime market to borrowers with weak credit histories.

In October the company posted its first quarterly loss in 25 years amid surging mortgage defaults.

In August, when US mortgage-related woes started to roil financial markets in the United States and other industrialised countries, Bank of America bought a 16 per cent stake in Countrywide in a deal worth $2 billion.

Countrywide, which has been the subject of bankruptcy rumours for several months, “will benefit from the stability of being part of the largest and one of the most financially strong financial institutions in the United States,” Bank of America said in a statement.

Both companies' boards of directors have backed the deal, which is subject to approval by Countrywide's shareholders and regulators, it said.

The Calabasas, California-based Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with nine million loans, Bank of America said.

The bank expects the transaction will be finalised in the third quarter and forecast after-tax synergy savings of $670 million.

The Charlotte, North Carolina-based bank said the deal would have a neutral effect on its 2008 results and be a positive factor in 2009, excluding merger and restructuring costs.

Investors appeared concerned about potential further hefty losses at Countrywide amid uncertainty about the extent and duration of the sharp housing slump, which has helped spark mounting concerns that the US economy could be falling into a recession.—AFP