Merrill has advised on six of the top 10 M&A transactions in the 12 months to July, is ranked first in terms of equity issuance in western Europe between Q2 2006 and Q2 2007, and has gained a 1.18% market share in the debt markets, the biggest gain among the top 10 underwriters.
According to Andrea Orcel, head of global origination and president of Merrill Lynch’s Global Markets and Investment Banking business in EMEA, the firm’s success is the result of three factors: stability and clarity with respect to the firm’s strategic direction and objectives; the regional organisational structure implemented in 2003; and the partnership structure that this creates.
“Stan O’Neal defined clear objectives, appointed the core management team and stayed the course. Such clarity of direction and stability have been critical. Building on that, in 2003 we created the origination division by moving all capital markets functions into investment banking, and eliminated matrix and joint reporting by regionalising the business. These two changes brought all client functions under the same roof and decision making much closer to clients. This enables us to create powerful regional partnerships centred on our clients: we succeed or fail together. Clients know that their relationship banker is able to take decisions and deliver the whole firm; that this is not just rhetoric.”
Mr Orcel also believes that the firm has demonstrated real leadership, not least in its M&A practice. Perhaps the most potent example is the ongoing battle for ABN AMRO, in which Merrill is the sole adviser to the consortium comprising Fortis, Royal Bank of Scotland and Santander. “We have demonstrated that, by focusing on clients and on how to be creative in adding value for them, you can achieve things that until then were thought impossible. In this case, to execute the largest cross-border deal ever done in financial services on a consortium basis and leverage each member’s strengths, thereby creating the most value and spreading risk,” he says.
“Merrill Lynch is sole adviser to the consortium, has arranged more than €50bn of underwriting commitments for equity and supplemental capital, and is now leading the raising of the capital and liquidity needed, even in these more challenging market conditions. That says a lot about our franchise and what we stand for,” says Mr Orcel.
There is still work to be done to broaden and deepen the EMEA platform. If the UK, France and southern European were strong, Germany and Austria were relatively weak. “Over the past few years, EMEA has been the engine for Merrill’s international growth; it will continue to be so in the coming years. If you look at our figures at the end of the year, you will see the significant progress we have made there while maintaining our historical strengths. I am confident that this trend will continue as we maintain our direction and continue to invest across the region, including in CEEMEA, where we have come a long way but still have significant progress to make.”
