Magazine article American Banker

Another Exit, More Doubts on Merrill in Lending

Magazine article American Banker

Another Exit, More Doubts on Merrill in Lending

Article excerpt

Just a year ago, Merrill Lynch & Co.'s long-running campaign to build a sizable syndicated lending business was producing eye-catching results.

It had worked its way into the top 10 in syndicated lending in the first quarter of 2001 and seemed to have plenty of momentum.

As it turned out, Merrill would not come anywhere close to that success again. In the year since, it dropped off the syndicated lending radar screen. Meanwhile, some on Wall Street began to question Merrill's commitment to the segment as executives left or were replaced.

The latest to be shown the door: Jack Yang, a former Chemical Banking Corp. executive who for the better part of the past decade had led the business.

Mr. Yang was not available to comment, and though a Merrill spokeswoman said he had left to pursue other interests, there was plenty to indicate the decision was at the very least a mutual one.

Regardless, Mr. Yang's departure raises anew questions about just where syndicated lending fits in at Merrill and whether his leaving the company stems from its desire to start afresh or scale back.

Mark Constant, an analyst at Lehman Brothers, said it "has never been a core business to Merrill Lynch." He said the firm is syndicating loans "as selectively as in the past."

Even in Merrill's best days in the business, syndicated loans made a relatively small contribution. But they grew fast enough that Merrill jumped to eighth place among U.S. syndicated lenders on the strength of its leveraged loan group. (Its exposure to syndicated lending is concentrated in these higher-risk loans.)

At the time, the company attributed its success to a plan established at the end of 1999 that combined its high-yield-bond origination practice with its leveraged loan origination activities to offer clients more integrated service. …

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