Merrill Re-Appoint Ex Fixed Incomes Chief To Stabilise Portfolio

by Stewart Douglas

Story link: Merrill Re-Appoint Ex Fixed Incomes Chief To Stabilise Portfolio

Investment bank Merrill Lynch has today reappointed their former fixed incomes executive in a move designed to help restructure the firm’s sub-prime debt exposure with a view to resolving outstanding issues and preventing the need for further embarrassing writedowns.

Former high profile executive Jeffrey Kronthal, who parted company with Merrill Lynch just last year, has been drafted in to address the problems currently faced by the firm’s investment portfolio, with a view to mitigating losses and managing excess exposure as efficiently as possible, given the circumstances.

According to a letter circled to employees of Merrill Lynch today by president Greg Fleming, the reappointment of Kronthal was on a consultancy basis and would see his direct input in the way in which their mortgage related income divisions are run over the coming months, in order to weather the storm into the next year.

However according to some discreet allegations, the whole fact that Kronthal and his colleagues left the investment firm in 2006 was partially responsible for the extent of the debt exposure experienced by Merrill Lynch, suggesting that it may have been an error on the part of management at the firm.

Kronthal will be appointed to work alongside the man who now holds his job as chief of fixed incomes, David Sobotka, with a view to readdress the balance of the current mortgage related portfolio problems.  It is thought that the move will help strengthen the financial situation of the company over the medium term, with a view to providing an increased return for the firm.

Analysts have suggested there may be scope for Merrill to cancel much of their debt, despite an announcement last month that the bank still held over $27 billion worth of debt outstanding.