Bank of America selling First Republic Bank

updated 2:20 p.m. ET Oct. 21, 2009

CHARLOTTE, N.C. - Bank of America Corp. said Wednesday it has agreed to sell First Republic Bank, a private bank it inherited from Merrill Lynch & Co., to a group of investors.

The buying group is led by private-equity firms General Atlantic LLC and Colony Capital. As part of the deal, the bank's top management, including founder and chairman James Herbert II, will stay on board.

The bank did not disclose terms of the deal. The Wall Street Journal reported earlier that the sale would be for more than $1 billion. It cited an unidentified person familiar with the matter.

Bank of America shares fell 10 cents to $16.91 in afternoon trading.

First Republic was purchased by Merrill Lynch for $1.8 billion in September 2007. The New York-based brokerage firm ran First Republic as a separate unit, maintaining its name and management. Bank of America bought Merrill Lynch on Jan. 1.

As of Sept. 30, First Republic has $19 billion in total assets, $16 billion in deposits, and $15 billion in wealth management assets under management.

Questions about First Republic's future have swirled ever since Bank of America agreed in September 2008 to buy Merrill Lynch. Bank of America already had a wealth-management business, U.S. Trust, which was acquired from Charles Schwab.

Bank of America is working to bolster its capital ratios and shed any units that are no longer strategic fits. Last month, it announced plans sell the long-term asset management business of Columbia Management to Ameriprise Financial Inc. for up to $1.2 billion.

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