* Merrill's wealth revenue jumps 9 percent to $3.5 bln
* Brokerage force down about 400 from last year
* Brokerage and private banking assets grow, trading down
By Jed Horowitz
NEW YORK, Jan 17 Buried within the mixed
quarterly earnings report from Bank of America Corp
Thursday was strong news about its global wealth and investment
management division, comprised primarily of its Merrill Lynch
Profit at the unit, which includes the bank's US Trust and
other private banking businesses, more than doubled from the
fourth quarter of 2011 to $578 million while revenue climbed 6.3
percent to $4.2 billion.
Merrill contributed $3.5 billion, or 84 percent, of the
unit's revenue, despite an exodus of 371 advisers during the
quarter. Its revenue rose 9 percent from the fourth quarter of
2011 and 2.7 percent from the end of the third quarter of 2012.
Bank of America does not break out Merrill's net income numbers.
Merrill ended 2012 with 14,917 brokers, down 9 percent from
16,413 a year earlier. The total excludes about 1,500
salespeople at Bank of America's Merrill Edge unit for
less-affluent clients, which is part of its consumer banking
Overall fourth-quarter profit at the second-biggest U.S.
bank company fell $1.6 billion from a year ago on
mortgage-related charges that eroded growing investment banking
and wealth management income.
The decline in Merrill brokers came largely from forcing out
advisers who were not thriving in the firm's training program,
said Susan McCabe, a company spokeswoman. She would not comment
on whether they represented a majority of the almost 400
advisers who left.
Per-broker revenue on an annualized basis grew 3.5 percent
since the third quarter and 7.6 percent from a year earlier to
$935,000. Excluding brokers in Merrill's three-to-four-year
training program, productivity would have risen to $1.3 million
of revenue per adviser, one of the highest averages in the
industry, McCabe said.
The biggest brokerage firms have for years been competing
fiercely for top advisers, offering six-figure recruiting
packages. Morgan Stanley, the biggest brokerage firm by
number of advisers, will report its fourth-quarter brokerage
data on Friday.
Wells Fargo & Co., the third-largest U.S. broker,
said earlier this month that it ended 2012 with 15,414 advisers,
up 151 from a year earlier.
Bank of America said wealth management earnings and revenue
were driven by "strong" client activity. Loan balances in the
unit grew $7.3 billion, or 7 percent, to end the year at a
record $105.9 billion. The biggest U.S. brokers have been
striving to make mortgage and other loans to their wealthy
clients to offset client disenchantment with stock trading.
Private bank and brokerage clients also added $9.1 billion
of "long-term" assets for bankers and brokers to manage during
the quarter. Assets under management ended 2012 at $698.1
billion, up 9.8 percent from a year earlier, while total client
balances were up 6.7 percent to $2.2 billion.
Brokerage balances fell in the fourth quarter, however,
ending the year at $975.4 billion from $984.7 billion three
That reflects a trend of U.S. investors eager to put their
money to work but cautious about short-term investing in stocks
and bonds. Charles Schwab Corp., often viewed as a
proxy for retail investors' engagement in the stock market,
reported Wednesday that it collected a record number of assets
from clients in the fourth quarter but continued to see a drop
in daily trades.
The decline in Merrill's brokerage balances at the end of
2012 was "largely due to a shift into assets under management
and deposits," the Merrill spokeswoman wrote in an e-mail.
The wealth management results exclude operations outside the
United States that Merrill is winding down.
Bank of America reported a $400 million gain during the
quarter from selling its brokerage joint venture in Japan to its
partner, Mitsubishi UFJ Financial Group. It also is
selling its European and some other Asian brokerage operations,
which lost $30.4 million in the first half of 2012, to
Switzerland-based Julius Baer Group.