Jan. 8 (Bloomberg) -- Merrill Lynch & Co., the world's biggest brokerage, is in talks to hire Thomas Montag, who resigned as Goldman Sachs Group Inc.'s global co-head of securities last month, two people with knowledge of the discussions said.

Montag would step in to lead Merrill's global markets division, overseeing equity trading and the fixed-income unit that contributed to the New York-based firm's $2.2 billion third-quarter loss, said the people, declining to be identified because the negotiations aren't public. An agreement hasn't been reached, in part because of Montag's ongoing ties to Goldman, where he remains an adviser, the people said.

Merrill Chief Executive Officer John Thain, a former Goldman Sachs president, is moving to replenish the brokerage's senior ranks after $8 billion of writedowns on mortgage-related assets in October led to the ouster of his predecessor, Stan O'Neal. Thain, who served as CEO of NYSE Euronext before joining Merrill last month, has already hired former associates from the NYSE, including Chief Financial Officer Nelson Chai.

``Everybody recognizes Goldman as the superior firm that got things right,'' said Jeanne Branthover, head of the financial services practice at Boyden Global Executive Search Ltd. in New York. ``It's hard to hire current Goldman executives, but when they retire, they're available.''

Montag, 50, declined to comment. Jessica Oppenheim, a Merrill spokeswoman, also declined to comment.

Montag retired from his Goldman position at the end of December after 22 years at the world's most profitable securities firm. He remains a ``senior director'' of the New York-based investment bank, according to a memo from Chief Executive Officer Lloyd Blankfein announcing his departure.

Goldman Touch

Dow Kim was head of global markets at Merrill until he left in May last year. Rather than filling the post, O'Neal promoted Greg Fleming, who was in charge of investment banking, and Chief Administrative Officer Ahmass Fakahany to co-presidents.

Montag was one of three co-heads of trading at Goldman, sharing responsibility with Michael Sherwood in London and J. Michael Evans in Asia.

Goldman has avoided most of the fallout from the collapse of the U.S. subprime mortgage market, which caused at least $97 billion of writedowns at other banks and brokers last year. Merrill may write down as much as $11.5 billion more from the value of its subprime assets when it releases fourth-quarter figures later this month, analysts estimate.

Montag started his career at Goldman in 1985 as an associate in the fixed-income department. He was co-president of Goldman's Japan business before relocating to New York last year as global co-head of securities overseeing the Americas.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net.

Last Updated: January 8, 2008 00:01 EST