BofA Chief admits his 'tactical' errors in acquiring Merrill Lynch

The Bank of America's chief, Ken Lewis, has for the first time today, admitted he made a 'tactical' mistake in acquiring Merrill Lynch.

The government money, used to prop up Merrill's losses has made the Bank seem weak, when in fact BoA would have been able to 'sustain the losses' without any help.

Mr Lewis vowed to repay the government money and stay as chief executive despite calls for his resignation.

It would be very easy to disappear into the sunset but we have to slug through this he said.

In hindsight it was tactical mistake. He expressed that it was 'an abundance of caution' that had led him to take more aid than was necessary to absorb Merrill's losses.

Mr Lewis took $20 bn of government aid following Merrill's $15 bn fourth quarter losses, despite the fact the Bank of America's own capital could have sustained the losses.

We could have had 8 percent capital after a $15 bn loss but we wanted to have a cushion. Mr Lewis said.

He argued that it would have been better to request for only $10 bn of aid and curtail investor fears that further problems were in the offing.

The $20 bn Merrill Lynch 'cushion' money combined with BoA's initial loan of $25 bn put the bank on the same levels of borrowing as Citigroup - a bank which many feared was on the verge of collapse.

Since it's acquisition of Merrill Lynch ended on 1 January, Bank of America's shares have tumbled 76 per cent.

And Mr Lewis has come under close scrutiny for his role in this loss of share value.

I want to repay the Tarp money before I go anywhere, and by then I think we will be seeing the success of the Merrill Lynch acquisition he said.

He vowed that repaying the government debt would be his last act before resigning as chief executive. He says that repaying the government funds can be done within two to three years.

The quotes from Mr Lewis come from an interview with the Financial Times newspaper. To find out more click on www.ft.com