| Glenn Barnes | ||||||
Merrill Lynch is reshuffling its European investment banking division to create a new structured credit unit.
Formed by merging the credit derivatives and securitization divisions, Merrill aims to put credit derivatives at the heart of its debt strategy. Glenn Barnes, who joined from the credit derivatives team at Dresdner Kleinwort Benson last July, will head the origination side of the new unit. Dale Lattanzio is promoted to head of trading.
Mike Clancy, who also joined last year from Dresdner, becomes head of European credit markets. Barnes explains: “We want to take a derivatives way of thinking and apply it across the board to different areas of the firm. The keyword is convergence.”
A number of other investment banks, including JP Morgan Chase, ABN Amro and Credit Suisse First Boston, are trying to use credit derivatives business to make up for losses in profits from bond underwriting and trading.
Barnes says of the new regime at Merrill: “We’re trying to inject lateral thinking into the debt strategy here, by thinking of different ways of doing things.
You take technology from one area – like credit derivatives – and use it in another – like asset receivables, for example.”
He says his securitization team is working on a big deal that illustrates his strategy.
Receivables from an airline business are being secured synthetically. Instead of selling the assets to a special purpose vehicle, the borrower sells on the risk attached to them.
For the aircraft receivables deal, the structured bonds will sell on the risk that bills will not be paid. This will be the first combination of credit derivatives techniques with airplane receivables securitization.
Merrill’s head of European investment banking, Claudio Aguirre, wants managers to think across product lines. “We must try to cross-sell more,” he says.
Barnes also heads a team devoted to company debt repackaging – like the £946 million ($1.4 billion) Eurotunnel debt repackaging – and a small team devoted to niche products such as mezzanine debt and the equity portions of collateralized debt obligations.
This item first appeared at www.euromoney.com/bonds.
