Bank of America reverses course on OpenAI with $520 million credit line

Bank of America extended a $520 million credit line to OpenAI after twice declining, betting the AI company's looming initial public offering will justify a relationship the lender's conservative chief executive had resisted.

"The decision to participate came after OpenAI filed confidential IPO papers with Goldman Sachs and Morgan Stanley, people familiar with the matter said, making the prospect of underwriting one of the largest U.S. stock listings a factor in the bank's calculus."

OpenAI's total available credit now exceeds $5 billion, up from $4.7 billion after the March 2025 expansion that Bank of America also skipped. The company was valued at $852 billion in its latest funding round in March, reflecting investor appetite for AI despite the absence of near-term profitability. Bank of America had previously sat out a $4 billion syndicated facility in October 2024 and a $4.7 billion expansion five months later, according to people familiar.

For Chief Executive Officer Brian Moynihan, the reversal marks a departure from the risk-averse strategy that defined his 15-year tenure. Missing OpenAI's IPO — potentially one of the largest in U.S. history — would have been a costly omission for a bank with Merrill Lynch's wealth management arm seeking high-profile tech mandates. The bank's stock hit an all-time high this week, yet its five-year total return has lagged every major U.S. peer, a gap some executives attribute to Moynihan's reluctance to pursue growth in volatile sectors.

The Risk Philosophy Behind the Reversal

Moynihan, 66, built his reputation steering Bank of America through the aftermath of the 2008 financial crisis, inheriting billions in losses from the bank's acquisition of Countrywide Financial and Merrill Lynch. His caution traces to an earlier episode: two decades ago, as a rising executive at FleetBoston, he watched the bank lose more than $500 million in Argentina's debt crisis.

That experience shaped a playbook that prioritized avoiding large losses over capturing upside. In 2017, when Wall Street peers took margin-call losses from the collapse of South African retailer Steinhoff, Bank of America preemptively shrank its securities-based lending business — and missed the subsequent boom that made such loans a revenue driver for competitors. During the pandemic, the bank loaded up on long-dated, low-yield bonds at rock-bottom rates, a position that eroded earnings for years as the Federal Reserve raised rates.

The OpenAI decision suggests a recalibration. Internal frustration had been building among mid-level bankers who said the bank's risk constraints cost them deals, according to people familiar. The $520 million credit line, while modest relative to Bank of America's $3.2 trillion balance sheet, signals a willingness to engage with high-growth, pre-IPO companies that the bank had previously avoided.

IPO Calculus and the $5 Billion Credit Wall

OpenAI now has access to more than $5 billion in total credit across its banking syndicate, providing a cushion as it weighs the timing of its public listing. The company has said it may delay the IPO until next year, and its private fundraising and credit capacity give it flexibility to wait for favorable market conditions.

For Bank of America, the calculus extends beyond the credit line. Banks that provide financing to IPO candidates often win roles in the underwriting syndicate, generating fee income that far exceeds lending margins. Goldman Sachs and Morgan Stanley, already named as lead underwriters, stand to collect tens of millions in advisory and placement fees if the deal proceeds.

The broader banking industry is watching closely. If OpenAI's IPO succeeds at or above its $852 billion private valuation, it could unlock a wave of AI company listings and create a new fee pipeline for Wall Street. If it stumbles, the episode would reinforce the caution that has defined Moynihan's tenure — and kept Bank of America on the sidelines of the technology boom.

This article is for informational purposes only and does not constitute investment advice.