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From Wall St to Dalal St

Risk isn’t a four-letter word for Merrill Lynch.

     Print Edition: June 1, 2008

After he stepped into the hot seat at wealth management giant Merrill Lynch, John Thain, Chairman & Chief Executive Officer, has been an extremely busy man—raising capital, reenforcing risk management practises and bolstering businesses in fast growing destinations like India. Thain has been particularly upbeat about the Indian economy.

“The Asia Pacific region, particularly India, is one of the most attractive places for growth. There’s a lot of wealth being created in India,” said Thain who was in India last fortnight on a whistle-stop visit. India, with its strong local demand, will be relatively less affected by the global credit crisis.

Merrill’s Thain: It’s getting better
John Thain
The former executive of NYSE Euronext has been successful in fixing some of Merrill’s problems in the US. The company raised capital and focussed on improving liquidity last quarter. Says Thain: “We made good many problems.

The first was capital and we raised $12.8 billion (Rs 51,200 crore) in new capital, which is much more than our write-offs. Second, we focussed on liquidity and now our liquidity position is at a record high.” Thain also stressed on the importance of risk management. A new team now reports directly to the chairman. Says Thain: “We have added to our risk management team, and we have reinforced its importance.” The Chairman also says that Merrill Lynch is adding senior personnel and has changed its compensation policy and is back to focussing on its clients.

Behind Merrill’s problems was the credit tsunami that rattled the global financial world and sparked off a global risk aversion, which saw a severe sell-off in emerging markets. But risk aversion is now easing. Says Thain: “The risk aversion is not really directed towards Asia Pacific. There was a general pull back towards risk, but if anything, it was more focussed to the US. Risk aversion, although not over yet, is getting better.”

Clifford Alvares

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