BofA Buy Raises Merrill Doubts

Merrill Lynch executives are daubing lipstick on the pig of a forced sale to Bank of America, but the future of the shop’s growing LatAm franchise is all but certain. “[BofA] highlighted Merrill’s emerging market franchise as one of the things they were interested in,” says an EM banker at the sold entity, citing remarks by Merrill CEO John Thain and BofA CEO Ken Lewis on calls with investors Monday. Merrill’s growing platform in LatAm is seen as highly complementary to BofA’s virtual nonexistence in the region. But the truth is that BofA has shown little appetite for LatAm, least of all investment banking. “[BofA’s] LatAm presence was very limited,” notes one LatAm-focused official at BofA, who hopes the commercial bank’s appetite for the region grows with the newly gotten franchise. He compares Merrill’s LatAm business to LaSalle’s trusts business, which BofA initially relegated as low priority following the merger, but slowly came to embrace once it became clear that LaSalle’s institutional and human infrastructure was robust and lucrative. Merrill’s strong US-based support for EM is a big plus, he adds. “It’s going to be up to Merrill to make a case to BofA to keep some businesses,” says a headhunter, referring to structured products, derivatives and LatAm. “BofA recently got rid of their high risk businesses including EM,” she adds. BofA’s banking activity in LatAm is limited to Mexico. The bank sold its BankBoston retail banking units in Brazil, Chile and Uruguay. BofA’s Lewis quipped last year that he had had “all the fun I could stand” in investment banking. It remains to be seen how much stomach he will have for LatAm, particularly on the scale Merrill was building it. Merrill’s LatAm chief James Quigley was en route to Brazil Monday and unavailable for comment.