Bank of America strode through the wreckage of Wall Street yesterday holding its prize aloft, extolling the great opportunity of acquiring Merrill Lynch and its “thundering herd” of 16,000 salesmen.

The speed at which America's biggest commercial bank sealed a $50 billion (£27.9 billion) share deal to buy Merrill has stunned Wall Street and the City of London, prompting questions about whether the two firms were nudged by nervous officials at the Federal Reserve Bank in New York fearing another collapse, or whether Merrill had been in talks with other banks.

The two chief executives - Ken Lewis, of Bank of America, and John Thain, of Merrill Lynch - batted away sceptics yesterday. The pair insisted that the first discussion had taken place on Saturday as the conclave of bankers and regulators at the Federal Reserve in New York were trying in vain to catch the falling body of Merrill's unfortunate rival, Lehman Brothers.

“There was no pressure from regulators, absolutely no pressure,” said Mr Lewis, who described the deal as “the strategic opportunity of a lifetime”. He said: “The first contact came on Saturday morning and we put the transaction together in 48 hours. The instant we talked it made sense.”

The share-swap deal agreed over the weekend pitches the value of Merrill at a 70 per cent premium to its closing share price on Friday. Haste over the weekend may have lost Bank of America some value, given the hammering suffered yesterday by banking shares on both sides of the Atlantic.

Mr Lewis said that he was not prepared to let Merrill slip though his fingers. “Merrill Lynch could have seen this through. Better to seize the opportunity than wait to catch the very bottom and not seize it at all,” he said.

Standard & Poor's, the rating agency, immediately poured cold water on the deal, as did the stock market, where Bank of America shares tumbled by 14 per cent. S&P cut its credit rating for Bank of America and said that it might cut it again. The ratings agency gave warning that the deal would put further strain on the bank's capital after its purchase in July of Countrywide, the mortgage lender.

The Merrill chief said that the deal “made all the sense in the world”, but he appeared more subdued yesterday than his new commercial banking partner. His role in the beefed-up Bank of America had not yet been decided, he said, adding: “This isn't necessarily the outcome I would have expected when I took this job.”

His staff is likely to feel the same way, for the merger will entail significant lay-offs, which are as yet unquantified. Bank of America has identified $7 billion of pre-tax cost cuts, of which a fifth will be earned next year. That would imply hefty job losses in America and probably in Britain, too. Mr Lewis emphasised that the cuts would come from both companies.

Key to this deal is Merrill's brokerage business, a retail distribution unit of 16,690 salespeople that Mr Lewis described as Merrill's crown jewel. It will be expanded to 20,000 with the Bank of America team. It is a sales force with its calling card at half of America's more affluent households - those with net assets of between $500,000 and $5 million - and it is a honeypot for Bank of America.

Having Merrill under his belt satisfies the ambitions of Mr Lewis, who clearly hankered for something better than Bank of America's half-baked investment banking operations, which lacked the breadth of products and the ability to attract the best staff.

“The frustration I have had is it is hard to be narrowly focused,” he said.Despite such commendations, it is apparent that Bank of America's depositors and shareholders have thrown a lifeline to the nation's biggest stockbroker, shielding it from the credit crunch. Mr Lewis said that for seven years he had been saying that commercial banks would eventually own investment banks because of “the funding issue”.

Unlike the Wall Street firms that fund their activities by borrowing in the wholesale markets, Bank of America has a base of depositors that underpins its lending.

Neither chief executive is expecting a rosy future. Mr Thain said that the environment was the most difficult he had experienced in 30 years. “We are coming out of a golden age,” he said.

His Bank of America counterpart expected next year to be tough: “I don't see the clouds parting in 2009.”

Mr Thain, who received a $15 million golden hello after taking over at Merrill last December, could collect a payout of almost $10 million if the deal goes through, according to estimates by a pay advisory firm. James F. Reda & Associates, a consulting firm that tracks executive pay arrangements, said that he could receive the additional payout whether he stayed with the combined company, or not.

Merrill shares closed almost unchanged at $17.06 last night, while Bank of America fell $7.19 to $26.55.

David Hendler, an analyst at CreditSights, said: “Given the skittish market, this stabilises Merrill's prospects at a time when the market is concerned about how much more there is to go.”

Standard & Poor's cut Bank of America's long-term credit rating one notch to “AA-minus”, its fourth-highest grade, saying that the merger “carries integration risk, particularly since it comes during a period of severe market turmoil”. Moody's Investors Service said that it might cut its “Aa2” rating for the bank, its third-highest grade. Fitch Ratings affirmed its “A-plus” rating, its fifth highest.

Banks by numbers

Bank of America

— Founded 1784 (as Massachusetts Bank)

— Has 6,100 branches in America

— Assets managed: $589 billion

— 2007 revenues: $68 billion

— 250,000 employees (7,000 in Europe, mainly in London and Bromley - 2,500 in investment banking, rest in card business)

Merrill Lynch

— Founded in 1914

— Offices in 40 countries

— Assets managed: $1.6trillion. Owns 50 per cent of BlackRock, which manages $1.4billion assets

— 2007 revenues: $11.3 billion

— 64,000 employees (8,000 in Europe, mostly in London)

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