Bank of America Corp. plans to sign a deal with Société Générale SA of France on selling a financing unit, according to the people familiar with the matter. The unit finances so called "fund-of-fund" companies that make investments in a number of hedge funds on behalf of institutional investors and wealthy families.

Despite Bank of America’s attempts to shrink certain hedge-fund-related businesses, people familiar with the matter point out the bank remains involved in its prime brokerage activities focused on hedge funds. Neither the value of the deal nor the size of the loan book was disclosed.

The representatives of the parties engaged, Bank of America and Paris-based Société Générale, declined to comment.

Since hedge funds, private investment partnerships have become recently a more powerful force in both the stock market and the bond market, the competition for their business has intensified.

The prime brokerage business has been dominated by Morgan Stanley and Goldman Sachs Group Inc. for a long time. But banks, including Bank of America, Deutsche Bank AG, UBS AG and J.P. Morgan Chase & Co., have attempted to change the situation on the market - the hedge funds were offered financing through the use of derivatives which require less maintenance. Regulators have expressed concern about the possible risks involved in such practices.

The expected sale occurs at a time of acute speculations about far bigger transactions in which banks such as Bank of America may buy fund-of-fund operations themselves.