By Tatiana Bautzer
NEW YORK (Reuters) -Merrill Wealth Management is creating a new division to expand credit offerings to its wealthier clients, taking advantage of the growing demand for such products among the super rich, senior executives said on Wednesday.
The group will begin with around 20 bankers, but may expand over time.
Bank of America’s wealth management businesses, which include Merrill and BofA’s private bank, registered a $16 billion increase in client loans to $241 billion in the second quarter from a year earlier.
Wealthy clients with dozens of millions invested at Merrill Lynch demand credit for different reasons than regular retail customers. The most common are to avoid large tax liabilities that would be created when cashing out on long-term investments, pay other taxes without divestitures, potential losses on sales of illiquid assets or the desire to keep investing in stocks as market indexes reach all-time highs.
“In some cases we help finance large timely purchases, such as a stake in a sports team, a new company or real estate,” said Kurt Niemeyer, who will lead the new group, reporting to Greg McGauley, head of Merrill Private Wealth Management, International and Institutional Groups. Loans can also help in succession and estate planning.
Custom loans tailored to clients’ unique requirements reached an all-time high, Lindsay Hans, president and co-head of Merrill Wealth Management, said. “Around 85% of those loans are extended to investors who had never previously used credit with us.”
The maturity in the loan portfolio for Merrill’s wealthiest investors is highly diverse, according to McGauley, depending on the purpose of the credit, varying from short-term liquidity instruments to mortgages or multi-year loans.
(Reporting by Tatiana Bautzer; Editing by Richard Chang)
Comments