No longer will any old Joe Shmo be allowed in the club. Read more »
Merrill Lynch Brokers Are Going To Have To Wake Up A Lot Earlier If They Want To List “Recipient Of Circle of Champions” Award On Their LinkedIn ProfilesBy Bess Levin
There are a lot of things in the financial industry that you could legitimately get upset about and so it seems sort of wasteful when people go around getting upset about the other things.1 Like: the too-big-to-fail banks have a lot of subsidiaries, which is bad for some reason. Complexity! Opacity! Subsidiaries. I dunno.2
Anyway one of the big ones is going away:
Bank of America Corp., the second-biggest U.S. lender, plans to merge its Merrill Lynch subsidiary into the parent company to reduce complexity and costs.
The move could happen as early as the fourth quarter and means Charlotte, North Carolina-based Bank of America assumes all the investment bank’s obligations and debt, Merrill Lynch said in an Aug. 2 filing. Dissolving the legal entity also ends Merrill Lynch’s need to file separate regulatory disclosures.
It’s true! Read more »
Taking Job At Merrill Lynch, Not Decision To Turn Office Into Versailles, Biggest Regret Of John Thain’s LifeBy Bess Levin
Regrets? John Thain has one. “I wouldn’t have taken the Merrill job,” he said in an interview. “I think that’s probably the single biggest thing.” Mr. Thain’s comments are some of his sharpest yet about life as Merrill Lynch & Co.’s chairman and chief executive. He arrived at the securities firm’s headquarters in lower Manhattan in late 2007 as the financial crisis was brewing. Within a year, Merrill was forced into a shotgun marriage with Bank of America Corp. A few months later, Mr. Thain was out. “I regret having to sell Merrill Lynch to Bank of America,” he said. [WSJ]
Honestly bank earnings week has been a little boring, no? It’s been quarters since anyone announced a six billion dollar trading loss, and the recent news is pretty much modest beats from a diverse mix of businesses and where is the fun in that I ask you. Financial-market memories are short and … have negative serial correlation, or something … which might explain why Goldman is down today despite announcing a $4.29 EPS vs. analysts’ $3.87, with strength in principal investments and debt underwriting making up for so-so FICC revenues.
The call: variations on boring. Goldman CFO Harvey Schwartz painted a picture of Goldman clients who are deterred from strategic activity by macro uncertainty – “oh we can’t do that merger, because, uh, Cyprus” – and so spend their time refinancing their loans every six months to get lower interest rates.1 I suppose their bankers have to make fees somehow. And there don’t seem to be many conclusions to draw from the numbers: FICC revenues are down because there is noise in FICC revenues, not due to any change in business mix or performance. VaR is down because market vols are down, not because of any change in risk appetite. Private equity gains in investing & lending reflect stronger public equity markets because private equity is just beta. I guess.
Nor is Harvey your go-to guy to fulminate about regulation, though these days really no one is. He said various nice things about how the regulators are working hard and getting it right, and how Goldman doesn’t act in anticipation of regulations but only responds to them when they’re final. Others have phrased this less charitably. Thus Goldman’s new BDC is not a preemptive effort to fit prop traders into the Volcker Rule, but just a client-driven part of Goldman’s asset management strategy – “deploying our competencies into opportunities we feel like our clients would benefit from.”
So what’s left? There’s comp, of course: comp accruals were 43% of revenue ($4.34bn), versus 44% in 1Q2012 ($4.38bn), and headcount is down 1%. Analysts tried to push Schwartz to extrapolate a trend there, but again he mostly resisted. Keep enough people to serve clients, etc. Read more »
They said it couldn’t be done. They said it didn’t matter if it was $4.5 million or $2.5 million or if they were giving it away. They said potentials buyers wouldn’t be swayed by the pitch to “sleep where Angelo Mozilo hath slept, after a few too many troughs of Boone’s farm” (AKA “The Mozilo Bedroom”), or to impress guests with the cocktail party fodder that “that chair you’re sitting in right now the very one Ken Lewis was sitting in when he decided to buy Merrill Lynch, can’t get better investing karma than that.” They said the vomit stains on the rug would not be a selling point. They were wrong. Read more »