CHICAGO - More than a dozen professionals were cut from the ranks of Bank of America Corp. and Merrill Lynch & Co.'s municipal groups in recent days as the two firms continue to merge their businesses amid ongoing economic turmoil and pressure to turn a profit this year.
The majority of bankers let go were from the Banc of America Securities LLC broker-dealer team and included at least three managing directors - Erin Gore, the New York-based co-head of the education and nonprofit group; Todd Bleakney, who ran the firm's short-term desk in its Charlotte headquarters; and Scott Verch, who managed derivatives products in the Charlotte office. Sources said Ken Schneider, a vice president, was also cut.
Tripp Davenport, a vice president in Banc of America's Dallas office, was also among the recent layoffs. Mark Nitcholas, a managing director and team leader in the Houston office, also has been cut, but it was unclear if he was included in the latest round or a previous round of layoffs.
"Rich Meister in New York is calling the shots," said one Texas source referring to Richard Meister, a New York-based managing director at Merrill who has Texas relationships. Frank Farley, who covered Southwest issuers for Banc of America, was cut earlier this year.
The groups at both firms had been bracing for the latest round of firings, following several previous cuts due to the economic turmoil and ongoing efforts to merge the two groups. A spokeswoman for the firm declined to comment on the latest action. Bankers at both firms have been talking to other broker-dealers, concerned over the stability of their positions, sources said.
Sources said several bankers had landed at other firms recently. It was not clear immediately if John Coan, a principal, and transportation banker in Banc of America's Washington, D.C., office, and Daniel Schroeder, a vice president, were part of the latest round of cuts or had resigned, but both have taken new jobs. Merrill's Michael Solomon, a director, resigned last Friday to take a position with another firm. Samuel A. Ramirez & Co. recently hired former Banc of America banker Ted Sobel to head its public finance group.
Sources also said Merrill's public finance group is expected to relocate from its offices in the World Financial Center to Bank of America's Tower at Bryant Park in Manhattan later this spring.
The latest round of cuts were completed ahead of the close of the first quarter and come as the merged firms moved into the top spot among senior managers, boosted by its role as a senior manager on the $6.5 billion California deal.
While some parts of the merged organization, including research, are doing business as Bank of America-Merrill Lynch, the firms have continued to underwrite bonds under both names. The combined firm has so far underwritten 111 issues with a par value of $15.4 billion, compared to 140 issues with a par value of $10.6 through the first quarter of 2008. Both figures reflect the combined business of the two firms.
Separately, Merrill ranked second last year among senior managers on all bond issues, managing $40.8 billion in 340 issues, while Banc of America ranked seventh, with 353 issues totaling $19.9 billion, according to Thomson Reuters.
The last round of layoffs, in early March, hit bankers, sales, trading and underwriting professionals, while the focus in the latest round appears to be on the banking staff. The ultimate goal of the reductions is to trim roughly 40% off the tax-exempt group's head count, according to public finance sources citing internal speculation.
Bank of America in late January undertook its first wave of layoffs, with the most prominent member of the public finance group cut in that round being Peter Hill, who had managed the public finance investment banking group. The move followed the December announcement that Merrill's chairman of municipal markets, John Lawlor, had emerged as the firm's selection to lead the merged muni unit.
Lawlor is overseeing all municipal activities, including origination, sales, and trading. Many market participants said the selection of Lawlor signaled that the firm would likely favor Merrill bankers as the two groups were combined following the takeover announcement in September.
Analysts were closing watching to see how the Charlotte bank fared during the first quarter with its quarterly earnings expected to be announced April 20. Bank of America's investment banking arm reported a $2.7 billion fourth-quarter loss - its first in 17 years - while Merrill reported a $15 billion loss.
Bank of America chief executive Kenneth Lewis has predicted a profitable year and said in published reports that performance in the first two months of the year was strong, although trading results have suffered recently.
Bank of America received $45 billion from the federal government's Troubled Asset Relief Program, including $25 billion in September and $20 billion at the end of 2008 as it absorbed Merrill's losses.
A recent report from Bloomberg News quoted internal Bank of America documents saying that the firm planned to increase the fixed base pay of some investment bankers so that bonuses would represent a smaller chunk of a banker's compensation.