Magazine article Global Finance

Merrill's Global Reach

Magazine article Global Finance

Merrill's Global Reach

Article excerpt

Thomas Davis, head of Merrill Lynch's corporate and institutional client group, discussed the globalization of investment banking with Sharon Kahn. Merrill tops a troika of investment banks that also includes Morgan Stanley and Goldman Sachs.

Q: Mr Davis, in a 1989 analyst ranking of "global banks of the future," Japanese and European banks dominated. What has changed to give American banks such a lock on banking today?

A: The decade of the 1990s has been a decade of equity-reequitization of the United States coming out of the LBO boom of the 1980s, privatization activity all over the world, the development of equity markets. It has also been an era of financial advisory work centered on privatizations, MiA, restructuring, etc. The ways the capital markets evolved have played to the strengths of US investment banks.

Q: Nine years ago analysts equated "banking" with commercial and universal banks. Have the trends you described aided investment banks?

A: They've been big factors, especially in the development of capital markets around the world. You're seeing products developed in the United States exported to other parts of the world.

Q: Merrill Lynch has moved into fund management, particularly with last year's acquisition of Mercury Asset Management. You're even making select loans. Is there a future for Merrill as a universal bank?

A: We do have leveraged financing capability-we started in the lending business three or four years ago. We can already provide the traditional commercial banking services that we need to offer as part of our investment banking activities. We don't see any particular advantage to hooking up with commercial bank.

Q: Rumors have persisted that Chase Manhattan and Citibank were eyeing Merrill.

A: Well, we have a great company. There's no doubt in my mind that people out there would like to own us. …

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