Hello reality, remember me?
As we’ve tried to tell the world lo these many months, Bank of America absolutely, positively will not maintain the Merrill Lynch brokerage structure as it existed pre-merger. News that longtime ML brokerage maven Bob McCann has already left the newly combined company should stop any and all denials on that front.
As Bloomberg notes, McCann was just put in charge of the BofA brokerage operation in large part to signal the supposed intention to both retain ML brokers and continue doing things the Merrill way. And it is impossible to overstate McCann’s role in the latter. He mentored many execs in the firm and set the standard for how ML handled clients, its only real, defining value-add asset. This is why so much attention was paid to the notion that BofA would run ML as an “independent” entity within the bank.
The problem is that ML’s compensation structure is fantastically expensive in addition to being highly incompatible with BofA’s own structure. Ken Lewis was not going to run a two-tier pay scale with his guys on the low end and try to make good on promises of $9b. in merger savings in the bargain.
The only question is whether McCann intended his quick exit — almost as soon as humanly possible once the merger was complete — to serve a flashing red light for former ML brokers to head for the lifeboats and abandon ship. Because no matter the intention, his departure surely will be taken as a sign for Merrill vets to get out while they can. For that reason, Lewis and his team are probably quite pleased this morning.
Bonus Observation: McCann foil John Thain is probably also quite pleased as well. This also spells mass exodus for ML vets as Thain is seen as a creature of Goldman Sachs who just happened to fall into the ML CEO job in late 2007. Lewis, of course, needs a Goldman vet like Thain given that the US financial system is being run by Goldman alums.
