Merrill reaches out to First Republic clients

 

Merrill Lynch & Co. Inc. last week assured concerned clients of First Republic Bank that the San Francisco-based bank, which agreed to be purchased by Merrill for $1.8 billion in cash and stock, would in fact remain independent, according to a client, who asked not to be identified.
New York-based Merrill invited wealthy First Republic clients in San Francisco to a private reception following the announcement, and executive vice president Robert McCann said “all the right things,” said the client, who attended the reception.
Mr. McCann, the client said, assured the well-heeled crowd that there will be a “Chinese wall” separating Merrill from the bank’s database and that Merrill brokers won’t poach business from First Republic customers. Merrill would do well to keep its word, because, according to the client, First Republic’s sophisticated customers — who have an average net worth of $20 million — won’t hesitate to go elsewhere if it doesn’t.
Merrill, of course, has a strong incentive to keep those clients happy, since one of the prime reasons why it is acquiring First Republic is to expand market share in the lucrative and increasingly competitive wealth management business.

Happy anniversary
Ben S. Bernanke celebrated his first anniversary as Federal Reserve Board chairman last week, and the timing couldn’t have been better.
The economy grew at a healthy 3.5% annual rate during last year’s fourth quarter, according to a new government report, and stock and bond markets rallied after the Fed left the target for short-term interest rates at 5.25%. What’s more, the Department of Commerce’s latest inflation figures for the fourth quarter — a modest 2.1% for personal consumption — were in line with Fed targets, bolstering Mr. Bernanke’s reputation as an inflation fighter.
Whether he can guide the galloping U.S. economy to the “soft landing” so deeply desired by Wall Street remains to be seen. But so far, Mr. Bernanke certainly appears to have had “good luck and good skill,” Peter Hooper, chief economist at New York-based Deutsche Bank Securities Inc., told The Wall Street Journal.

Slippery slope
Big stars at past gatherings of the annual World Economic Forum in Davos, Switzerland, have included the likes of Bill Clinton, Bill Gates and rock star Bono from U2.
Stepping into the spotlight at this year’s get-together of global heavy hitters at the Alpine ski resort were private-equity luminaries Glenn Hutchins, co-founder of Silver Lake Partners in Menlo Park, Calif., David Rubenstein, co-founder of The Carlyle Group in Washington, and Stephen Schwarzman, head of The Blackstone Group of New York.
But a high profile also makes for a big target. European trade union leaders at Davos attacked what they described as private equity’s “buy it, strip it and flip it” approach to business. And bank regulators called for more transparency in private-equity and hedge fund transactions.
Perhaps not coincidentally, Michael Gordon, London-based chief investment officer for Fidelity International Ltd., a division of Boston-based Fidelity Investments, set off a firestorm last week with a letter to the Financial Times headlined, “Am I alone in struggling to make sense of private equity’s appeal?”

India up, Brazil down
Investment in India got a boost last week when New York-based credit-rating firm Standard & Poor’s conferred investment-grade status on the South Asian powerhouse.
S&P cited India’s accelerating economic-growth rate, substantial foreign reserves and strong capital markets, and the rating is expected to open up those markets to an even wider investment base.
India joined China and Russia as investment-grade emerging markets, leaving Brazil as the only BRIC country without the pedigree. In the eyes of Wall Street, the South American giant’s star has been dimmed by longstanding government deficits, sluggish economic growth and a recently re-elected Socialist president.