Sanat Vallikappen 
 
Mumbai: “The ability to raise significant amounts of debt and the tightening of credit spreads are signs that the credit crisis is getting better,” said John A Thain, chairman and chief executive officer of Merrill Lynch.

Thain sure must be on the lookout for such positive clues. For, the 94-year-old institution he took over from sacked chief Stanley O’ Neal in December 2007, has written off over $29 billion over the last three quarters. It still has an exposure of over $90 billion to assets that could be a potential time bomb if the housing slump in the US and the credit crisis deepen.

The 52-year-old former chief executive officer of NYSE Euronext, who was brought in to put the house of Merrill Lynch in order and clean up its books is confident that assumptions he has now built into pricing mortgage-based assets would ensure a less bumpy ride for Merrill from hereon. “Half of the mortgages need to default and housing prices have to be down 48% if we are to take any significant hit,” he said, partially answering a question on whether there would be further writedowns this quarter for the world’s largest brokerage.

In India for the first time after taking over as Merrill Lynch CEO, Thain, holder of a 10-year multiple entry visa, was gung-ho about his business in the Asia-Pacifc region and India in particular.

“Of all the growth markets in the world, India looks the most attractive,” said Thain. “Falling home and employment in the US, and rising food and energy prices do have an impact around the world. But the level of domestic demand in India will make sure the country is less affected and more immune to the US slowdown,” he said.

At a time when Merrill Lynch has announced 4,000 job cuts (mainly in the US), it will continue to add people to its India team. Hemendra Kothari, chairman of DSP Merrill Lynch, the Indian joint venture in which Merrill holds a 90% stake, said that headcount in India has doubled and revenues tripled in the last two years.

Merrill Lynch does not disclose revenues from each geography it is present in. All it discloses is that 60% of its revenues are derived from outside the US. First-quarter 2008 net revenues stood at $2.9 billion, down 69% from the corresponding quarter last year.

Source : DNAIndia