Magazine article American Banker

Merrill Boosts Reserves, Puts Executive on Leave

Magazine article American Banker

Merrill Boosts Reserves, Puts Executive on Leave

Article excerpt

Merrill Lynch & Co. has placed David W. Tralka, the head of its small and midsize lending unit, on paid leave on the heels of announcing loan-loss reserve increases for the second and third quarters.

The New York company would not say Wednesday when Mr. Tralka was placed on leave, nor would it say whether there was any connection between the leave of absence and the boosting of reserves.

But when Merrill reported its third-quarter results Tuesday, several analysts peppered Ahmass Fakahany, its chief financial officer, for more information about reserve levels for the two quarters.

Mr. Fakahany said Merrill boosted reserves in its small-business portfolio after reviewing its lending operations but did not identify any bad loans. The portfolio contains loans made to brokerage clients.

"Over all, we have put stronger discipline in a number of our businesses, and we did a review of this one and are implementing our practices," he said during a conference call Tuesday. "I think we will continue to put rigor and rigid steps in that business."

After adding $60 million to reserves in the second quarter, Merrill further boosted its reserves in the third quarter, though it did not say how much. A spokesman said the $60 million second-quarter increase was equal to 1% of Merrill's entire loan portfolio.

Mr. Tralka's leave of absence and the issue of Merrill's reserves were first reported Wednesday in The New York Times. Mr. Tralka has been the chairman of Merrill Lynch Business Financial Services since August 2000. …

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