Thursday, September 18, 2008


(courtesy of Shane B., emphasis mine)

Bank of America Said to Cut Off Merrill Before Deal (Update2)
2008-09-18 20:21:39.300 GMT

By Bradley Keoun and David Mildenberg
Sept. 18 (Bloomberg) -- Merrill Lynch & Co. Chief Executive
Officer John Thain told employees that Bank of America Corp.
``cut our trading lines'' in the days before it bought the firm,
signaling a loss of confidence in the brokerage's ability to pay.
Thain made the comments while explaining his decision to
sell Merrill, according to five employees who attended the event
at the company's New York headquarters. The Sept. 15 remarks were
rebroadcast on an internal system to all 60,000 employees.
``Before the trade was done Bank of America cut our trading
lines,'' Thain said at the meeting, according to the people, who
declined to be named because they weren't authorized to discuss
the internal meeting. ``We did get them to put it back.''
The disclosure shows how close at least one of Merrill's
trading partners was to reducing its credit after a 36 percent
decline in the firm's stock price last week. The shares tumbled
on speculation Merrill might be the next securities firm to
collapse following Lehman Brothers Holdings Inc., which filed for
bankruptcy protection on Sept. 15 after investors and trading
partners lost confidence in the New York-based company.
Since the Bank of America agreement was announced on Sept.
14, Merrill has gained 29 percent in New York trading. The
second-biggest U.S. securities firm by market value rose $2.70,
or 14 percent, to $22.06 in composite trading today as of 4:14
Merrill spokeswoman Jessica Oppenheim declined to elaborate
on the Bank of America moves or say whether other firms had
pulled back their trading lines. Scott Silvestri, a spokesman for
Charlotte, North Carolina-based Bank of America, declined to
comment, citing a policy of not discussing client matters.

Trading Lines

Trading lines include credit or liquidity sources that
securities firms use to facilitate transactions or to meet cash
Merrill began its talks with Bank of America on Sept. 13,
even as the bank was considering a bid for Lehman, and struck a
deal by nightfall the next day.
Since then, Merrill's stock was one of only two gainers --
the other is Jefferies Group Inc. -- in the 10-company Amex
Securities Broker-Dealer Index. Morgan Stanley, the third-biggest
firm, is down 39 percent this week, while No. 1 Goldman Sachs
Group Inc. has tumbled 30 percent.

For Related News:
More stories on Merrill Lynch: MER US CN BN
Top financial news: FTOP

No comments: