Merrill Posts Loss, Shares FA Data

After posting a net loss and write-downs of additional $6.5 billion in the first quarter of 2008, Merrill Lynch says it is cutting some 3,000 jobs – but that plan leaves its 16,000 financial advisors generally intact, news reports say. The brokerage firm will also take a restructuring charge of $350 million in the current quarter for the layoffs but expects to generate some $800 million of cost savings each year.

Financial advisor (FA) headcount was 16,660 at quarter-end, a decline of 80 FAs for the quarter. However, the company says, “positive growth in experienced FAs was more than offset by a strategic decision to accelerate the departure of lower-performing trainees; excluding this reduction, experienced FA headcount increased by 75 FAs for the quarter.”

On April 17, the company reported a net loss from continuing operations for the first quarter of 2008 of nearly $2 billion vs. net earnings of $2 billion in the first quarter of 2007. The overall net loss for Q1’08 was $1.96 billion.

Net write-downs totaled $1.5 billion related to U.S. asset-backed securities-collateralized debt obligations (or ABS CDO) and credit valuation adjustments of negative $3 billion related to hedges with financial guarantors, most of which related to U.S. super-senior ABS CDOs.

The brokerage firm notes, however, that it also had record quarterly net revenues of $3.6 billion in global wealth management, record net interest profit, strong fee-based revenues, $9 billion of net inflows of client assets into annuitized revenue products, and $4 billion net new money, despite challenging market environment