Bank of America is to buy US investment bank Merrill Lynch for $50 billion £27.7 billion).
News of the buy-out came as it was revealed Bank of America had switched from negotiations to buy Lehman Brothers and opted to take on its Wall Street rival.
The deal values Merrill Lynch at around $29 a share – a 70 per cent premium on its Friday closing price.
However, the investment bank's share price had a 52-week high of $78.66.
Bank of America chief executive Ken Lewis said: "Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders.
"Together, our companies are more valuable because of the synergies in our businesses."
US authorities were behind the scenes helping to forge the deal to prevent another bank after Lehman Brothers hitting the wall.
As a result of the deal, Bank of America will be the biggest underwriter of global high yield debt, the third largest underwriter of global equity and the ninth largest adviser on global mergers and acquisitions.
Besides the fall of Lehman Brothers, today has also seen the insurance giant AIG reportedly turn to the US Federal Reserve for a $40 billion bridging loan.
The New York Times reports AIG's plans to raise capital have fallen through and it has rejected a buyout offer from private-equity group JC Flowers.
AIG is under pressure to raise capital after reporting losses of $18.5 billion and an almost 79 per cent fall in its share price.
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz