BoA Merrill Lynch wants little Osborne fallout

 
David Hellier
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LOSING a star banker is obviously never easy for an investment bank, dependent as it is on a raft of client relationships. But losing a banker amid speculation of a regulatory probe is especially problematic, since the bank is forced to keep a lid on the reasons for the departure until the regulatory issues have all been dealt with.

So it is that BoA Merrill Lynch finds itself in a bind, having last week parted company with Andrew Osborne, one of its best known bankers, while he awaits a hearing with the Financial Services Authority.

There was no official comment yesterday on what the FSA inquiry is all about, but interestingly the issue has been known about for months by some at Merrill Lynch.

Osborne had a host of solid client relationships that now appear to be vulnerable to poaching from hungry competitors such as Morgan Stanley, Goldman Sachs, RBC or Barclays Capital.

How long, for example, will Tullow Oil, who yesterday described Osborne as “a very important and crucial adviser” after he engineered two fund-raisings in the past couple of years for the group, remain loyal to the bank?

Clients may wait some time before ditching advisers in the aftermath of a banker’s departure to give a sense of decency to the changeover, but there is no disputing the importance of individual relationships to such mandates.

Merrill, which has beefed up its UK banking business on a number of fronts in recent months, is optimistic that many of the personal and strong relationships Osborne had, with companies such as Cairn, Bowleven, and Afren Energy, will not lead to the companies themselves now running to new advisers.

The bank points out that its relationships with such companies have been “deep” and don’t revolve just around one man but include many others toiling away in the research and lending departments, for example.

Furthermore, in Julian Mylchreest, Merrill has recruited an outstanding head of its power and energy sectors and there has been some steady recruiting in the group’s corporate broking team. The whole UK and Ireland business is headed by the redoubtable Simon Mackenzie-Smith.

But these are testing times for the bank’s UK banking business which also recently lost Simon Fraser, its head of broking, to the joys of early retirement and farming.

david.hellier@cityam.com
Follow me on Twitter: @hellierd