By Josh Fineman and David Mildenberg
Jan. 6 (Bloomberg) -- Merrill Lynch & Co. brokerage head Bob McCann plans to leave the company less than a week after Bank of America Corp. completed its acquisition of the securities firm.
McCann, 50, a 26-year veteran of New York-based Merrill, was head of the brokerage unit since 2003. He announced his departure yesterday in an internal memo from John Thain, head of Bank of America’s investment-banking and wealth-management business. Spokeswoman Selena Morris confirmed the memo.
Bank of America Chief Executive Officer Kenneth Lewis called Merrill’s brokerage the “crown jewel” of the company when the deal was announced in September. Since then he has worked to try to prevent Merrill brokers from quitting. The 16,850-broker unit outperformed Merrill’s investment-banking and money-losing trading businesses last year.
“This is going to create a lot of shock waves,” said Mindy Diamond, CEO of Diamond Consultants in Chester, New Jersey. “This may accelerate the decisions of those who have taken a wait-and-see attitude. BofA and Thain have been saying that Merrill will be operated somewhat autonomously, but the brokers have been skeptical of that. McCann’s departure will definitely upset a lot of people.”
Bank of America was down 4 cents in German trading today at $13.94. The shares declined 65 percent during the past 12 months, compared with the 48 percent drop of the 24-member KBW Bank Index.
After more than $50 billion of losses and writedowns tied to the collapse of the U.S. subprime mortgage market, Merrill agreed in September to be bought by Charlotte, North Carolina-based Bank of America, the third-biggest U.S. bank by market value. During the same weekend, New York-based securities firm Lehman Brothers Holdings Inc. went bankrupt.
‘The Right Time’
“After much reflection and deliberation, I have decided that this is the right time for me to move on,” McCann told Thain in the memo. McCann didn’t immediately respond to a message left on his mobile phone seeking comment.
McCann was named head of the combined firm’s brokerage unit in October following the takeover, a decision made to convince Merrill brokers to stay with the firm, analysts and executive recruiters said. At the time of McCann’s appointment, Bank of America said the leader of global wealth and investment management would be named later.
Merrill said in November that 99 percent of its top-selling brokers agreed to sign a retention package. More than 6,200 brokers accepted Bank of America’s offer, including 99.3 percent of those who generated annual revenue of more than $1.75 million, McCann said at the time.
Disenfranchised Brokers
“It’s pretty gratifying to all of us,” McCann said in a Nov. 14 interview. “We did a good job of putting together a transition award package that was fair and appropriate.”
The retention package didn’t satisfy all Merrill brokers.
“There are a lot of disenfranchised Merrill Lynch advisers,” Diamond said. “Many of those who are under $500,000 think they are getting screwed by the retention package.”
McCann, who grew up outside Pittsburgh, joined Merrill in 1982 as an equity salesman. He ran the firm’s institutional sales division and its equities business before a 16-month stint as head of the research division. In 2003, he left the firm to take a job as vice chairman of Axa Financial Inc., only to return to Merrill six months later.
“Bobby McCann has been a wonderful mentor over the years to countless people on Wall Street,” said Diane Garnick, a former Merrill equity derivatives analyst who now helps oversee about $400 billion as an investment strategist at Invesco Ltd. “His legacy is all of these people that grew up under the family of Merrill.”
Bank of America has announced plans to cut 30,000 to 35,000 positions in the next three years because of the merger with Merrill and a weak U.S. economy.
To contact the reporters on this story: Josh Fineman in New York at jfineman@bloomberg.net; David Mildenberg in Charlotte at dmildenberg@bloomberg.net
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