Merrill Lynch is in the process of merging its cash flow and synthetic collateralized debt obligation businesses, according to a senior banker at the firm. The change is being done to avoid "double pitching" the same collateral managers and investors for business. The banker says that an internal memo announcing the change was imminent as of last Wednesday.
Merrill is one of the last firm's to reconfigure its CDO group along these lines. Many firms, including competitors such as Bear Stearns (BW, 3/25), Salomon Smith Barney (BW, 8/5), J.P. Morgan Securities and Lehman Brothers have already unified their cash flow and synthetic operations.
In the new configuration, Barry Finkelstein, managing director, will be in charge of both cash flow and synthetic CDOs, heading a new structured credit products group, according to this banker. Prior to the change, Finkelstein headed only the synthetic business. Also prior to the change, Scott Bohner and David Blackwelder, the two top directors who run the cash flow structuring business, assumed de facto the role of cash flow co-heads although they did not officially carry the title. It remains unclear whether their titles will change but they are likely to be more involved in structuring synthetic transactions than they were before, or to work more closely with synthetic structurers. The move is also aimed at integrating origination, structuring and distribution under one umbrella. Finkelstein declined to comment.
This reshuffling is part of an ongoing effort at Merrill Lynch to redefine lines of command since Dansby White, formerly head of structured finance left the firm (BW, 7/28), says the banker. Since White's departure in July, Bohner and Blackwelder have reported to three different bosses, the most recent being Steve Padovano, global head of derivatives, according to this senior banker. They now will report to Finkelstein. Similarly, Jarrett Bruhn, their peer in synthetic structuring will now directly report to Finkelstein. Bohner and Blackwelder did not return calls seeking comment.
In the process, two CDO structurers were let go last month, adds this banker. One is John Tartaglia, a director, and the other, whose name could not be obtained, is at the associate level. The bank is not planning additional layoffs, as the entire group remains small (relative to its competitors), with only 16 staffers in total.