Today the big story on Wall Street was Merrill’s massive $2.2 billion charge against fourth-quarter earnings for layoffs. What the headlines didn’t say was that the firm was actually adding brokers to its U.S. retail unit, a spokesperson says. And that trend is expected to continue in 2002.
"We will have more financial advisors at the end of the year than we have now," spokesperson Eric Hendrickson said after Merrill announced the charge this morning.
Hendrickson would not divulge actual numbers for the retail brokerage unit. He said those numbers will be released the week of Jan. 21, 2002.
No matter how big the increase in retail brokerage ranks turns out to be, it is significant when you consider the bloodletting at Merrill, half of which came from foreign units. Last year, Merrill’s layoff tally amounted to between 15,000-16,000, the firm says. That's a decline of about 21%, the largest layoff figure by a Wall Street firm in recent memory, according Morgan Stanley analyst Henry McVey.
As part of Merrill’s announcement today, the firm said it will cut 1,200 jobs at its money-losing retail brokerage business in Japan and close 20 of its 28 branch offices there. The firm also said it is consolidating its private client offices in the U.S., Europe, Asia and Australia and for the closure or sublet of excess office space in the U.S.
Merrill hopes to save $1.4 billion a year in costs from the job cuts and restructuring. Merrill also said that the worst of the downturn was over; its shares jumped by nearly 3 percent on the news. On Jan. 3, Canadian Imperial Bank of Commerce, Canada's third-biggest bank, completed its $409 million acquisition of Merrill's Canadian retail brokerage and fund-management units. There are 1,000 brokers in Merrill’s Canadian division.
Merrill’s recent transactions are "strong moves" to boost the company’s profitability, McVey says. But many brokers and other company employees contacted by Registered Rep have been wondering if Merrill isn’t positioning itself to be sold.
The firm denies it, saying, "We have positioned the company for improved profitability and growth, and as management has said before, no one can increase shareholder value like we can," Merrill’s Hendrickson says.
At least one broker contacted agrees. "I've been hearing about a sale every year in the 14 years I've been here, and those rumors come and go," says a Merrill rep. "I don't know if they're more or less true than before. My philosophy is everyone is for sale at the right price--and I've even heard Merrill personnel say that in the past."