When Lyle LaMothe left Merrill Lynch last year, he admitted he was concerned with the bank's pressure to sell products of its parent company, Bank of America. The scores of departing brokers shared the sentiment. So when Merrill brokerage boss John Thiel told Reuters that he is committed to cross-selling products from parent Bank of America to investors, it came as a bit of a surprise to some.
“We compete against banks, because now everybody is a bank. They all want to get to where we are, to have the ability to deliver both sides of the balance sheet to clients,” Thiel told the news wire, which put the move into an industry-wide perspective:
The views highlight a debate in wealth management that pits the independence and intimacy of smaller firms against financial giants that provide access to a full array of investments, including products unavailable anywhere else. Wall Street firms, forced to rein in trading and investing since the financial crisis, are leaning on wealth management to pick up the slack.
Morgan Stanley Smith Barney and UBS' U.S. brokerage arm are both pursuing more cross-referrals with their investment banks; Wells Fargo is merging its banking functions with its newly acquired Wachovia's brokerage; and JPMorgan Chase is building out its retail brokerage business and a private banking client program.
Merrill is hiring hundreds of advisors and boosting its training program to 4,000 new recruits from 3,000. Meanwhile, advisors face compensation pressure to sell Bank of America and Merrill products, as well as to attract wealthier clients.
BofA stops selling home loans to Fannie Mae. [NY Times]
AIG reported a Q4 profit of $19.8 billion on an accounting gain. [AP]
HSBC will cut fewer jobs in Hong Kong than it initially announced. [Dow Jones]
Lloyds posts $4.4 billion 2011 loss on compensating customers wrongly sold insurance. [DealBook]
Auto lender Ally Financial hired Cerberus Capital to help oversee turnaround efforts. [Bloomberg]
Carlyle hired Goldman and Nomura to handle the $873 million Tsubaki Nakashima IPO. [Reuters]
A Deutsche survey suggests hedge fund assets may rise a record 12 percent this year. [Bloomberg]
India has proposed setting up a multilateral bank that would be exclusively funded by BRICS nations and finance projects in those countries. [Businessweek]
A fund that was once part of Oppenheimer is being investigated by the SEC and the Massachusetts attorney general. [WSJ]
Businesses are starting to invest cash again, prompting bankers to hope they might start borrowing, too. [Reuters]
Academic says the U.S. banking crisis may repeat itself. [Businessweek]