Merrill Lynch

Merrill Lynch, also known as Bank of America Merrill Lynch, used to be an independent investment bank and is now the wealth management and investment banking division of the Bank of America.

Merrill Lynch used to be the world’s biggest stock broker, although it lost that accolade in the 1990s. This has been regained with the merger with Bank of America and Bank of America Merrill Lynch is once again the world’s largest brokerage with 20,000 advisors and $2.5 trillion of client assets.

As well as being a stock broker, Bank of America Merrill Lynch is also one of the largest providers in the world of wealth management and private banking. It is also one of the major investment and corporate bankers dealing with a wide range of services including mergers and acquisitions, high yield debt, equity placements and commercial lending.

Bank of America Merrill Lynch owns about a third of BlackRock, the leading investment manager, with $3.2 trillion of assets under management. Its roots are in the Blackstone private equity group. It deals with fixed income, equity, cash management, real estate and alternative investments. It is publicly traded also having big stakes from PNC Financial Services and Barclays PLC. The Merrill Lynch share came from the merger with Merrill Lynch Investment Managers in 2006. BlackRock merged with Barclays Global Investors in 2009 and became the largest financial money manager in the world.

Merrill Lynch was founded in 1914 as Charles E Merrill at 7 Wall Street. It became a partnership a few months later when Edmund Lynch joined and was renamed “Merrill, Lynch & Co”. In the early years most of its success was an investment house, equivalent to a private equity group today, specialising in buying up companies in promising industries and transforming them into large and profitable firms. Examples of this included Pathé Exchange, which later grew into RKO Studios as well as Safeway which was a small grocery chain at the time they bought a controlling interest.

In the 1940s and 1950s there were a series of mergers with large retail brokerages such as E A Pierce & Co, Cassatt & Co and Fenner & Beane. This meant that Merrill Lynch became the dominant retail broker and by 1957 was the world’s largest brokerage. In that year it took the name Merrill Lynch & Co.

Merrill Lynch had a very large broker network, which in 2006 had reached 15,000 brokers across the world. This meant that if they were advising on or underwriting a large stock floatation they could get a large number of retail investors to buy into it. While placements were a common way of putting investments on to the stock market Merrill Lynch was able to do this on a far larger scale than other brokerages. It’s large customer base earned it the nickname “the thundering herd”.

Bank of America, which bought Merrill Lynch in the 2008 financial crisis, is the largest bank holding company in the United States. With the acquisition of Merrill Lynch, Bank of America became the world’s largest wealth manager and greatly increased its position in investment banking.