“Greg Fleming is in for a busy year, the 45 year-old Merrill Lynch president and chief operating officer is breathing fire on all cylinders, addressing bank's staff at a “town hall” meetings and “circle of champions” events”
Merrill Lynch stunned the markets last October when it revealed $5 billion in writedowns from risky bets on sub-prime mortgage assets. Ballooning to $29 billion (£14.8 billion) and resulting in 4,000 job cuts
The revelation cost Mr O 'Neal, then the chief executive, his job and the bank's executives, led by Mr Fleming, were forced to go cap in hand to a collection of sovereign wealth funds to raise emergency capital.
Fleming remains in buoyant spirits. Arriving in London last month to rally the troops and get them re-focused and back on track after the extreme turbulence of the past nine months.
In his “town hall” meeting ...
I said that we have come a long way and put a lot behind us.
He emphasised on getting back to the day-to-day blocking and tackling that everybody was thinking about last June or July before it all went in a different direction.
It's important for people to know that we feel like we are in a position to be on the offensive and build the business
The 16-year Merrill Lynch veteran argues that the violent adjustment of huge writedowns, followed so quickly by intensive capital-raising, have made him confident that recovery would be quicker this time than in previous crises.
The fact that you could write that much down and put the capital back in such a short period of time leads me to be more optimistic than some about the future.
At least he can be confident of his own role. The arrival of Mr Thain raised questions about the future of all senior executives at Merrill Lynch, including Mr Fleming.
The new chief executive has brought in a number of staff from outside the company but reaffirmed Mr Fleming's status when he unveiled his new line up recently. Now, to judge by the number of references to Mr Thain, it is clear that they work together well.
On several occasions Mr Fleming ensures that he uses Mr Thain's words when answering questions on sensitive issues, such as the speculation that Merrill will need to go back to Singapore, Kuwait and South Korea's sovereign wealth funds.
Mr Fleming is in no doubt about the value of the sovereign wealth funds' intervention - the funds injected cash more quietly than could have been achieved by a mainstream institution, for a longer investment term than hedge funds and with fewer demands than private equity.
Many of them [the sovereign funds] do detailed analysis before moving, but when they are ready to go, they are ready to go in the amounts required given the scale of the problems. So they have been a significant positive, which is why I believe there has been less political noise in the US than you would have expected.
Fleming is also upbeat about a recovery in the financial markets ... with a revival in mergers and acquisitions, albeit in at least six months.
What you need is well-capitalised institutions that are able to do the deals. As we work our way through this, we will have more and more of those and then it will pick up considerably, no later than the middle of next year. Regional US banks and small financial companies will go under the hammer, and the strong euro will fuel cross-border deals ...
On the likelihood of consolidation among Wall Street's big four banks.
There's only Goldman Sachs, Morgan Stanley, Lehman Brothers and Merrill Lynch left, so it becomes a conversation about culture, fit etc.
Mr Fleming is even unruffled about the accounting rules that forced global investment banks to cut heavily the value of their credit-related securities, even if the
underlying assets were unimpaired ...
Fleming claims Merrill Lynch is well-positioned to participate in the markets' recovery ...
Bank owns 49 per cent of Blackrock, the blue-chip asset manager, and client businesses such as M&A advisory and equity underwriting are high return-on-equity operations.
The mortgage origination business is gone, but Merrill Lynch continues to offer mortgage servicing to other loan providers.
The 94-year-old American bank further increases its reliance on markets outside the United States ...
Sixty per cent of its institutional revenues now come from outside the US and that's going to be 75 per cent within the next five to seven years. Mr Fleming goes on to say. In wealth management we want to triple our revenues outside the US over the next five years.
Merrill Lynch had a reputation for cutting and burning staff more viciously than most rivals in the bad times. In the aftermath of September 11, the bank shed more than 20,000 workers, then struggled to find the manpower to capitalise on the subsequent upturn.
Mr Fleming admits ...
There is a concern in our employee base, a feeling of 'here we are again', and John Thain and I are very focused on not having that happen this time.
He figures that the worst writedowns are over and that the price of leveraged finance paper is picking up. It is not going at close to face-value prices, but he says that buyers have come out that were not there in the first quarter of this year.
Source: Times Online
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