Merrill Lynch’s fixed income and commodities division – which includes the foreign exchange businesses – will avoid the worst of the job cuts resulting from the bank’s $50 billion takeover by Bank of America.
According to CEO John Thain, Merrill expects to cut “thousands” of jobs from within its information technology, operations and corporate functions but jobs in the fixed income and commodities divisions would not be eliminated after the deal, he said.
“We haven’t mapped it out in terms of actual number of people, but we are committed to saving $7 billion across the combined platforms, and that will be a challenge,” he said in a Bloomberg Television interview last week. “Between our two companies it will be clearly thousands of jobs.”
Analysts are expecting around 10,000 job losses at the firm globally. Merrill has already cut more than 5,000 jobs in the past 18 months, taking its headcount to about 60,000.
Thain’s comments were made as Bank of America officially announced that it would retain several key Merrill Lynch investment banking executives after the merger closes this year.
Greg Fleming, Merrill’s chief operating officer, will become head of corporate and investment banking while Bob McCann, Merrill’s wealth management chief, will run the combined financial adviser group. Tom Montag, head of Merrill’s sales and trading operations, will oversee sales, trading and research. All will be based in New York.
The bank said earlier this month that Thain will oversee its global banking, securities and wealth management operations.
Bank of America acquired Merrill last month for $50 billion in a quick fire sale after a crisis of confidence in Wall Street firms forced Lehman Brothers into bankruptcy. Merrill was suffering from losses running into the tens of billions of dollars from securities linked to subprime mortgages and was seen as being vulnerable.
That said, cuts are reportedly ongoing at Merrill’s FX business, with market sources reporting seven cuts from the troubled bank’s FX sales teams in New York and London. In New York, three people are reported to have left, while the cuts in London have apparently focused on the bank’s Southern European sales team.