Merrill Lynch International, the London-based business of what was once known as Merrill Lynch before it was subsumed into Bank of America, has released its results for the year to December 2011.
They show some considerable hiring. Merrill Lynch International started the year with 2,600 people and ended it with 3,390 – an increase of 30%. 374 of the new hires were sales people, traders, or ‘advisors’ (ie. M&A or capital markets professionals). And 416 were support, operations or technology professionals. This was in line with the bank’s 40% to 60% split between front office people and support staff.
Big cash payments
BAML’s London people are handsomely remunerated and a surprising proportion of their handsome remuneration appears to be in the form of cash. Last year, the average MLI employee received a total of $487k (£310k, including social security payments), of which only $47k was share awards. This compared to total compensation per head of $528k for 2010. Cash payments (salaries and cash bonuses) per head were held strangely static between 2010 and 2011, but share allocations fell dramatically: they were down 46% year-on-year.
Illusory big after tax loss
Sadly, Merrill Lynch International seems not to have been very profitable: it made an after tax loss of $1.1bn.
However, things weren’t as bad as they seem. There were certainly profitability issues. Sales and trading income fell 72% and the company registered an operating loss of $268m versus a profit of $143m the previous year. However, $772m of the $1bn loss was related to a deferred tax charge as the bank revalued the massive $9bn ‘deferred tax asset’ it accumulated after the 2008 financial crisis.