BANK of America Corp yesterday completed its purchase of Countrywide Financial Corp, the home lender battered by the collapse of the subprime mortgage market, for about US$2.5 billion, 37 percent less than originally planned.

The second-biggest US bank by market value said in a statement on PRNewswire yesterday that Countrywide shareholders received 0.1822 of Bank of America stock for each share they held of the home lender. That works out to about US$2.5 billion, based on Monday's closing price.

The second-biggest US bank by market value agreed in January to acquire Countrywide for US$4 billion in stock amid speculation the California-based home lender might go bankrupt.

The price declined as foreclosures rose to a record and shares of both companies dropped. Bank of America fell 21 percent in New York Stock Exchange trading during the past two weeks.

Chief Executive Officer Kenneth Lewis must prove that the benefits of being the top home lender in the world's biggest economy outweigh mounting defaults. Lewis has brushed off suggestions from analysts that he scrap the Countrywide purchase.

"The mortgage market in the US is going to take a while to turn around," Stuart Plesser, an analyst at Standard & Poor's who recommends clients sell Bank of America shares, told Bloomberg News. "Bank of America will be right in the thick of it."

Bank of America shares fell 7 cents in early German trading yesterday to US$23.80, as home prices dropped and lawsuits surfaced against Countrywide.

As shareholders were preparing to approve the deal on June 25, California and Illinois sued the lender for allegedly luring borrowers into loans they couldn't afford.

Washington Governor Christine Gregoire announced plans to fine Countrywide for alleged discrimination against minority borrowers and asked that the company's license to lend in the state be revoked. Florida Attorney General Bill McCollum sued Countrywide on Monday for allegedly deceiving customers.

"There will still be some negative impact with associating Countrywide with Bank of America," said Eva Weber, an analyst at Aite Group LLC in Boston. "From a reputation perspective, that's certainly something Bank of America will have to overcome."

Countrywide's biggest challenge is its US$27-billion pool of option adjustable-rate mortgages, which let borrowers skip part of their payment and add the balance to their principal, said S&P's Plesser.