One of the top producing private bankers at Merrill Lynch says Bank of America is dismantling US Trust, the largest private bank in the United States. A Bank of America spokesman denies the story.
Registered Rep came across the story while checking out our story about a likely management and compensation shakeup at Merrill Lynch. Their source doubts our story, saying its “utterly not true.” He’s described as “one of the firm’s top producing advisors, a member of the firm’s private banking investment group (PBIG) who claims to have access to top brass.”
He thinks that Sontag’s departure wouldn’t have much of an effect on the brokers, but the compensation changes would be devastating. “Can you imagine if they messed with compensation right now? A comp change like that would be the end,” he says.
He tells Registered Rep that he suspects our story came from a “bitter U.S. Trust employee.” Of course, we can’t tell you who our sources were for the story because we agreed to preserve their anonymity. But we can tell you none of the sources for that story were current or former U.S. Trust employees.
That’s kind of inside baseball, though. So let’s skip on to the interesting stuff. This theory about US Trust prompts Registered Rep’s source to drop a huge bombshell:
“It smacks of a bitter U.S. Trust employee,” he says.
Why? He says what’s really in the works is that U.S. Trust—which includes a trust division and a wealth management division—is being dismantled. “It’s an unproductive organisation without scale,” he says. There are roughly 800 U.S. Trust advisors, with an average client account size of $5 million; the average account size for Merrill’s 280 PBIG advisors is $25 million.
The advisor says Merrill’s global private client group contributed revenue of about $1.2 billion in 2008 with just 280 advisors (though Merrill doesn’t break this out and couldn’t confirm that number). By comparison, U.S. Trust showed revenue of $2.7 billion in 2008 with about 800 advisors, according to its earnings report.
Now shutting down US Trust would be a huge story. For some reason, however, Registered Rep kind of buries this lead in favour of playing up this guy’s scepticism about our story. We don’t mind his scepticism—we just think the US Trust news is a bigger story.
Bank of America spokesman John Yiannacopolous says the guys story isn’t true. We can’t confirm it independently. Given that the PBIG broker is given to baseless (and incorrect) speculation about our sources, we wouldn’t be surprised if he was just guessing about Bank of America’s plans for U.S. Trust also.