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BofA to ‘downsize’ Merrill placement platform

The bank, which inherited the placement agent business following its merger with Merrill Lynch, will use a smaller team to manage its current clients, but will not take on any new clients.

Bank of America is downsizing the placement agent business it inherited from Merrill Lynch after the two banks merged last year, according to a person with knowledge of the situation.

Some employees in the placement unit will be made redundant. Bank of America will keep a smaller staff to manage the business’s current clients, but “will not be taking on any new clients”, the source said.

The source would not characterise the downsizing as a permanent closure of the business, stressing the move is related to the stalled fundraising market. “There’s not a market out there at the moment,” the source said.

Merrill Lynch and Bank of America declined to comment.

Merrill’s private placement unit, which employed about 30 people and is led by Loren Boston, who'd formerly led Citi's private placement business, has raised recent funds including Silver Lake’s $9.3 billion third fund, AIG Highstar’s $3.5 billion third fund and Avista Capital’s $2 billion debut fund.

Citi said in April it would close its third-party private equity fund placement platform by the end of the year. Credit Suisse, though, has strengthened its asset management global distributions team, which includes its private funds group, hiring 18 professionals to expand the team.

Bank of America has been working to integrate the companies’ private equity businesses since the companies merged in a $50 billion all-stock transaction last October. In March, James Forbes, a 14-year Merrill veteran, was appointed to head the Bank of America Merrill Lynch Global Principal Investment business, which houses the combined companies’ private equity and real estate arms.

Bank of America Merrill Lynch has reportedly been asked along with several other financial firms by the US Securities and Exchange Commission for information on fees related to the placement of funds with public pensions, according to the Wall Street Journal. The inquiry is part of a broader investigation into “pay-to-play” activities involving US public pensions.