Can Bank of America make Merrill Lynch work?

Sallie Krawcheck's legacy will be determined in large part by whether she can get Bank of America (BAC) and Merrill Lynch to really work. Most agree that's going to be a hard job, and it remains to be seen how Krawcheck will fare. She may fail or succeed, but she will likely do so in a fishbowl. The pressure is on, and the media and other competitors will not give her much slack. Case in point: Tom Bradley, CEO of TD Ameritrade Institutional, went after her at a corporate event. Her sin was that she went on CNBC and voiced her view of RIAs, which of course he'd take issue with. He referred to her as "that executive" and parsed her remarks word-for-word. 

There will be some minefields. Crain's New York, in a terrific profile, notes that she banned the words cross sell, financial supermarket and distribution channel in her kingdom, only to have other executives at Bank of America openly use the words in other venues. It's not a big deal, but it illustrates "the complexity of the task that lies before Ms. Krawcheck." There are lots of moving parts at the bank no doubt. 

So can she succeed? Can she win over the Thundering Herd, despite the extreme cultural differences, and meld a cohesive unit? And perhaps put herself in position to run the entire bank someday? You would have to say that the odds are not in her favor. The differences are just too profound. She is making some of the right moves. 

She has made winning over brokers a top priority. She stuck with the famous bull logo, which had disappeared temporarily, and launched a new $20 million marketing campaign. There are apparently no Bank of America signs in the lobby at Merrill's longtime headquarters in the World Financial Center. She's never anything but complimentary about the firm. You do have to wonder how she will succeed when the Herd seems to have a dim view of the parent. 

Still, she seems to have staunched the flow of client assets, and the unit is profitable. And yet there are always rumors. In a recent memo, she felt the need to dispel gossip: "No, we are not selling [private banking division] U.S. Trust," she wrote. "No, we are not putting [brokers] on salary and bonus; no, we're not smashing U.S. Trust and Merrill Lynch's private banking group together; no, we're not converting our wealth management branches into ATMs." 

For a good test case of whether the merger can work, we can look to the retirement market, where the bank is making a major push for assets. The company just launched campaigns worth $35 million to garner more assets. It really wants this market, as do a lot of other institutions. In October, the bank rolled out My Retirement Income, a service that automatically transfers funds from a Merrill Lynch cash management account into a Bank of America deposit account. 

This highlights the bank's integrated approach--even though she doesn't like using the words--and the perceived imperative to cross sell, whether you call it that or not. This is smart. She has to use all the weapons in the arsenal, from both sides, but we'll have to see if there's any real synergy. Stay tuned. - Jim