Merrill finishes year-long Pacific Rim reorganization

At the end of last week Merrill Lynch announced a small but significant change to its Australia investment banking organization. The move mirrors changes the bank has instigated in Asia and Japan and could explain its recent re-emergence as a major force in regional investment banking.

Essentially Merrill is splitting its two top jobs in Australia, making Kevin Skelton the Australia country head and chairman of Australia origination. At the same time, Geoff Brunsdon has been promoted from his previous position of vice chairman of M&A to become head of Australian investment banking.

This split puts Brunsdon in charge of running the overall investment banking business, while Skelton gets to focus on firm-wide issues as a whole in Australia with specific additional focus on developing key relationships and securing high profile mandates. This move is similar to what Merrill Lynch has done in Asia and Japan.

The task of origination and client contact is now jointly run by Erh-Fei Liu, chairman of China and KL Wong, chairman of Asia Pacific. New hire Sheldon Trainor has been brought in to manage the overall investment-banking group.

In Japan as well, Jiro Seguchi has been promoted to run the quotidian task of management, while Shinsuke Amyra has moved over from being head of investment banking to chairman of origination, again covering clients in investment banking and capital markets.

All these bankers report to Damian Chunilal, head of Pacific Rim investment banking and the architect of this new split functionality. The moves bring a busy period of reorganization and rehiring to an end as Merrill seeks to return to the highest echelons in Asian investment banking, a position it vacated in the late 1990s and early 2000s.

Indeed, in 2004, Asia including Japan and Australia became the second largest contributor of both revenue and profit to the firm after the US, eclipsing Europe for the first time. According to Chunilal, the reorganization he started in 2004 was initially about fixing Merrill's position in each country in Asia. In 2005 it is now about fixing the content of the business in the region.

"We've hired some of the best names in the market recently," he says. "These have been tactical, targeted hires, building relevancy in a disciplined way."

Chunilal claims it took six months of persuasion to get Trainor to leave his alma mater of Morgan Stanley. Indeed the list of recent hires is impressive. On the debt sales and trading side, numbers are up 25% this year alone.

The firm announced today that it has hired Mitsumaru Kumagai from Mizuho Financial to be chief fixed income strategist for Japan. Masatoshi Tamai has joined from Nomura Securities to head yen bond sales and trading.

Merrill has also hired Bin Gao from Lehman Brothers to be chief Pacific Rim fixed income strategist. In derivatives, Joseph Gouaco joined Merrill Lynch from Credit Suisse First Boston as managing director for Southeast Asian markets for the structured solutions group. He is based in Hong Kong and reports to Samir Atassi.

Abhinav Gorawara has joined from JPMorgan as managing director and head of the integrated equity and debt wholesale derivatives marketing team focusing on third party distributors. Gorawara brings Monique Sin with him as an associate.

In investment banking, Koichiro Yasuda joins from Nikko Citigroup to become head of Japan investment banking advisory.

Andrew Cooper joined the firm as managing director and head of equity-linked capital markets, Pacific Rim.

Stefan Dorfmeister has rejoined Merrill Lynch in a newly created role within the DCM group, dealing with clients and countries not directly covered by Merrill's existing footprint, also looking at the development of local currency and structured finance origination activities, securitization, commodity-related and hybrid financings.

In ECM, Jason Cox joined the firm from Goldman Sachs with responsibility for the Korean and Taiwanese markets. Merrill has also promoted Sumeet Puri to be head of execution for Asia Pacific ECM, while Soofian Zuberi has relocated to Singapore to lead Southeast Asian origination.

Finally in commodities, Mark Long has joined as an MD of Pacific Rim commodities trading, serving most recently as Citigroup's Asia Pacific head of commodity derivatives. Also joining are Justin Leavey, director - who will focus primarily on exotics and structuring - and Daniel Soong, vice president, who will concentrate on crude and fuel oil derivatives.

It is perhaps too early to say if all the hires will propel Merrill back to the heights it used to enjoy in Asia, but they are certainly a statement of intent. That the firm is able to extract such a large number of high profile bankers from the top ranks of its rivals shows a re-found respect for the firm among the regional banking pool.

As Asia sits under the humidity of the rainy season, perhaps that distant rumble is not the sound of thunder, but the sound of the thundering herd coming back over the horizon.