Bank of America Merrill Lynch is on a roll — the latest big hire is investment banker Margaret Ren, who is rejoining BoA Merrill as China executive and chairman. She will also become a member of the firm’s Asia-Pacific executive committee, the bank said yesterday.
Last week the firm hired “flow monster” Loh Boon Chye as deputy president for Asia-Pacific and head of Asia-Pacific global markets. This week it’s a well-known China rainmaker.
Ren is powerfully connected — she is a daughter-in-law of former Chinese premier Zhao Ziyang — so the firm is not surprisingly hopeful that she will be able to help land big deals. But insiders are keen to emphasise she’s not rejoining Merrill as much as joining a newer, bigger franchise.
“She left the old Merrill at a time of extreme market volatility and industry uncertainty,” said a market source. “Merrill then was an offshore investment banking model. Fly in, do a deal, and fly out. She’s now joining a bigger, stronger financial institution that is onshore in terms of corporate banking, transaction banking, trade, credit, leasing and fixed income, and then there’s still the offshore IB business. It’s a much broader mix with much bigger ambition.”
Before joining BoA Merrill, Ren was chairman for corporate finance for Greater China at BNP Paribas. From 2007 to 2009, she was chairman of China investment banking at Merrill Lynch.
Ren will report to Matthew Koder, Asia-Pacific president. She will be responsible for leading the China business and will partner closely with Huang Xiaoguang, president of Bank of America’s China business, according to an internal memo.
The firm already has a powerful China bench, in addition to Huang. Bing Wang and Catherine Cai remain co-heads of China investment banking. Cai also has the title of chairman of China investment banking. All will report to Ren.
“In this role, Margaret will be responsible for leading and driving the strategic direction of our businesses in China and for ensuring we enhance and broaden our client relationships in the country,” said Koder in an internal memo to the firm. “She will oversee our efforts across global banking and markets to ensure we are maximising this opportunity by delivering the full BoA Merrill Lynch franchise to both our Chinese clients and our global clients doing business in China.”
There’s no getting around the fact that connections, or guanxi, as well as experience, matter in Asia. A whiz kid is nice; a really smart, connected senior banker is better. “She’s got the gravitas,” said a source. “No question. And of course she has the right relationships with regulators, government and clients, and that matters in China.”
Competitors who want to throw stones at BoA Merrill note that the firm still doesn’t have a Chinese securities joint venture, but BoA Merrill’s rapid-fire response is that most banks, given the chance, would start again in China when it comes to JVs (indeed some have).
“We are not just an investment bank and so a securities JV is not the end game for us although, I guess, when the time is right, it could be part of the mix,” said a source at BoA Merrill. “Of course, if we wanted one she would likely be the person to get it for us. Right now the potential partners in these JVs are tier-two at best and there is no clear path to ownership, or at least control.”
Ren was hired by Damian Chunilal as chairman of Merrill Lynch’s China investment banking business in February 2007 and reported to Sheldon Trainor. But prior to that move, she had been out of the industry for a while as she was subject to an inquiry by US regulators over alleged wrongdoing relating to China Life Insurance’s $3.5 billion IPO. Her former employer, Citi, which was one of the lead managers of that IPO, suspended her in June 2004 and she left the US bank shortly afterwards. However, in September of 2006, the US Securities and Exchange Commission formally cleared Ren.
But she earned her stripes early on when she worked with Bear Stearns during the red-chip euphoria of the late-1990s. She won IPO mandates for China Telecom and Guangshen Railway for Bear Stearns even though the US firm had one of the smaller investment banking presences in the region. At Citi, she became a vice-chairman of investment banking for Asia, and again helped secure the firm some major China mandates.
However, critics point out that Ren’s strengths and relationships were primarily with China’s major state-owned enterprises and the government, which may be less valuable for an international investment bank today, when so much of China’s future growth is focused on private entrepreneurial firms.
“I’d say same clients, but many more, different products,” said a source. “That’s where the corporate bank comes to the fore. If all you do is ECM advisory you are in trouble as all the SOEs are listed. You might get one deal a year, but that’s not enough to base your franchise on.”