NEW YORK - Merrill Lynch & Co., the world's largest brokerage, will cut back on packaging home loans and consumer debts into securities after the collapse of the subprime mortgage market eroded demand for the products.
"Opportunities in many areas" of structured finance and so-called collateralized debt obligations "will be minimal for the foreseeable future and our activities will be reduced accordingly," New York-based Merrill said in an e-mailed statement. The firm will continue packaging corporate loans and derivatives into securities.
Merrill issued the statement after chief executive John Thain told investors at a conference in New York yesterday that the firm planned to exit its collateralized debt obligations and structured credit businesses. Jessica Oppenheim, a spokeswoman for the company, said the statement was released to clarify Thain's remarks. She declined to elaborate on the statement.
Also yesterday, Merrill, awarded stock options to three top executives after eliminating their cash bonuses.
Merrill posted its largest-ever loss last year after writing down the value of its obligations and other assets related to subprime mortgages by more than $24 billion. The bank was the biggest underwriter of the obligations from 2004 through 2006.
