DBRS Confirms Merrill Lynch Bank USA at AA

DBRS has today confirmed Merrill Lynch Bank USA's (MLBUSA or the Bank) Deposits and Senior Debt rating at AA. MLBUSA is a wholly owned subsidiary of Merrill Lynch & Co., Inc. (Merrill Lynch or ML). The trend is Stable.

MLBUSA’s ratings are underpinned by its important role within the businesses of ML which is rated AA (low). With $67 billion in assets largely funded with retail deposits, MLBUSA has a sound financial risk profile, including a stable deposit base, diverse lending activities and robust risk management.

MLBUSA is a legal vehicle that depends largely on ML’s operating businesses for originating deposits, loans, securities and other financial transactions. As such, DBRS believes that MLBUSA accommodates the banking needs of ML’s commercial and consumer client relationships, thereby capturing a larger share of their business and strengthening their ties to ML.

Implicit in the rating is DBRS’s expectation that, in the unlikely event that MLBUSA should require financial support, Merrill Lynch would have the incentive and the resources in its combined operating businesses to provide such support. Moreover, the regulators of MLBUSA, which is a Utah-state chartered Industrial Loan Company and an FDIC member, provide oversight.

DBRS expects MLBUSA to remain a source of strength for Merrill Lynch. The Bank maintains substantial capital strength that compares well with those of large regional banks. In addition, MLBUSA maintains a strong liquidity position. The Bank’s wholesale funding reliance is quite low. The deposit base is stable, and it comprises predominantly FDIC-insured retail deposits garnered via sweep accounts with clients in ML’s private client business.

DBRS’s rating reflects current capital levels that demonstrate an appropriate cushion which is well above that required to be considered well-capitalized. Such a cushion ensures that MLBUSA could ride out adverse events without having to call on the parent for a capital injection at a time when the overall company’s financial profile might also be stressed. DBRS would view any significant reduction in capital adequacy or material change in the Bank’s risk profile as a negative in the context of the rating.

Merrill Lynch Bank USA, a $67 billion Industrial Loan Company headquartered in Utah, is Merrill Lynch & Co., Inc.’s primary operating bank in the United States.

Merrill Lynch & Co, Inc., with assets of $841 billion is a leading wealth management, capital markets and advisory companies with operations in 37 countries.

Note:
All figures are in U.S. dollars unless otherwise noted.