balance sheet, shooting for league presence of yesteryear

Hoping to reclaim its former glory as a top rated ABS underwriter, Merrill Lynch last week revamed its structured finance units to more easilly leverage its balance sheet, which shoud translate to additional lead managing business. The move also alignes the structured finance operations with the principal finance group, a trend started recently by market leader Salomon Smith Barney.

Merrill announced internally last week a realignment of its operations that groups six operating units under the new Global Principal Investment & Secured Financing umbrella. The new group, headed by Jeff Kronthall, is viewed as a more efficient way to use the banks' balance sheet, which previously had been operating independently from investment banking activity.

Groups affected by the structural change are: Global Asset-Based Financing, Global Principal Investment, Global Real Estate Finance, CMBS/ABS Non-Credit Structured Finance and Merrill Lynch Capital, according to the internal memo circulated last Monday.

"Before (the realignment) the lending activity of ML Bank USA would operate independently and the balance sheet was not used to drum up underwriting business. We have lending relationships with many issuers for which we have not underwritten deals," said a Merrill source. "Now, under the new structure the underwriting business should get a boost."

This follows a restructuring of operations at Salomon Smith Barney, which aligned the new principal finance operations, headed by William Graham and Bill Grady, with the term ABS operations, headed by Robert Mallin and Ted Yarborough. At least one other bulge-bracket bank is believed to be considering a similar realignment.

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