Is BofA's Merrill Lynch Brand Losing Its Edge?
As if Bank of America (BAC) didn't have enough trouble with government "stress testers" knocking on the door and investors dumping its stock. Now people are questioning the enduring value of the brand Bank of America acquired when it bought Merrill Lynch last September.
Merrill was staggering beneath reckless subprime investments, but its 95-year-old name and 16,000 brokers merited a 70% premium over its market valuation—at least in the eyes of Kenneth D. Lewis, BofA's chief executive. Anxiety is rife, however, that Merrill's brand is eroding.
Top BofA officials have begun to tell international executives to de-emphasize Merrill and its bull logo when they visit clients in Europe, according to people familiar with the situation. "We're being told to tone down the Merrill brand," says a senior international banker at the firm. BofA executives have told Merrill veterans that marketing research shows BofA sells better than Merrill in Europe, the banker adds.
This notion is at odds with the view widely held in financial circles in London, Paris, and Frankfurt that, in fact, the BofA brand—symbolized by a stylized American flag—has little cachet outside the U.S., while Merrill is well-known.
A Merrill spokeswoman, Jessica Oppenheim, denies BofA has tried to diminish Merrill. She points to an employee memo in January that introduced the moniker Bank of America Merrill Lynch for the combined company's corporate, commercial, investment banking, and capital markets businesses. "Nothing has changed regarding these branding plans," she says.
The consternation has been exacerbated by the recent departure of at least nine senior bankers from Merrill's European operations. The bleeding in Europe follows the ouster of Merrill CEO John Thain and other high-level executives in the U.S.
Entire brokerage teams are defecting. Merrill's sales force has lost at least 100 people to UBS (UBS) alone in recent months.
"The Merrill Lynch brand is not quite dead yet. It's in hibernation, and it has been since Bank of America bought them," says Carri Degenhardt-Burke, a Wall Street executive recruiter whose personal money is managed by Merrill. She has noticed a drop in morale and is considering taking her investments elsewhere. "It's sad," she says, though the news isn't all bad for her: She has poached several disaffected Merrill brokers for UBS and Morgan Stanley (MS).