Merrill Lynch and Bank Of America Falling Apart One Trade, One Deal At A Time


Bank of America’s acquisition of Merrill Lynch is looking like an even worse deal with each passing day.  Tensions between the Merrill and B of A sides of the now merged company continue to mount, putting whatever value BofA may have hoped it had acquired at risk.

Traders at Merrill Lynch are increasingly frustrated at what they regard at the slow and, well, stupid ways of the Bank of America back offices.  Trades that were handled quickly on Merrill’s platform often find themselves bogged down when Bank of America’s staff become involved. Documentation as simple as assignment agreements for debt products can become incredibly—and, in the view of Merrill traders, unnecessarily—complicated in the hands of the BofA a crew.

This is more than a matter of annoyance. Trades can fall apart if the counter party thinks the difficult or delay is too costly. Business falls off when outsiders decide they would rather deal with someone else than get bogged down with inefficient compliance, legal, execution or other back office functions. Traders worried that their personal bottom lines are hurt by this start looking for exits.

Investment bankers at Merrill are also fretting the narrowing confines of BofA. Lina Saigol at the Financial Times reports that Merrill investment bankers are having deals spiked by Bank of America, which is unwilling to deal with the conflicts on companies that it has lent to. For a lender as big as Bank of America, this can create a serious obstacle to dealmaking.
Elsewhere in the Financial Times, Adrian Cox runs through the exodus of senior staff from Merrill’s European desks.

Ian Carton, co-head of global markets, financing and services in Europe, on Monday said he was leaving after 17 years at the company, becoming at least the ninth high-profile managing director in the region to resign since mid-September, when Bank of America rescued Merrill and rival Lehman Brothers collapsed.

Other departures include Bob Wigley, former European chairman; Brent Clapacs, head of equities for the region; Richard Slimmon, Michael Findlay, David Jimenez-Blanco, Steve Zander, Jean-Tardy Joubert and Stuart Graham

Also straining the Merrill and BofA relationship: compensation. Many Merrill bankers fear that a huge part of their compensation could be made in BofA stock, which they fear could become worthless if BofA gets nationalized.