In September 1998, Russia's economy and financial markets imploded, top banks had to club together to pump millions into hedge fund Long Term Capital Management to ensure its survival and the end of financial civilisation as we know it seemed close at hand.
Those at the helm at Merrill Lynch thought decisive action was required and started to layoff staff. As it turned out, the Russian affair was nothing more than a little local difficulty and everything returned to normal in just a matter of weeks. Merrill's actions had, however, much longer term affects and there are those who say that the firm's franchise was endangered for a while because of them.
Fast forward to 2000. The early signs are that we are heading for a global slow-down and possibly a recession. Merrill does it again. The firm starts to cut staff and cuts quickly. A brave decision in the circumstances, but nevertheless, time proved it to be the right one. Merrill wielded the axe early and got into cost-containment mode way before its main rivals.
But it has been tough on the staff, who have not had an easy time in the last three years. Some 24,400 are said to have lost their jobs. Now, it seems, the firm is on the up. Last week Merrill posted a 50% rise in third quarter profit, with net revenues coming in at $1.04bn - the firm's highest third-quarter profit ever.
Last quarter's results also represented Merrill's second-best quarterly earnings since the firm started trading. Merrill has now reported six quarters without an earnings decline. It's share price is currently at around a 27-month high, with the stock rising 15% in the third quarter alone.
Many were now thinking that it was time for Merrill to give back something to the staff who had helped the firm through this difficult patch. Salaries have been frozen for two years and bonuses, in common with most of Wall Street, have been off. Morale, we know, is bad throughout the industry. Something had to be done.
And it looks like it has been. Merrill CEO Stan O'Neal has now confirmed that the firm's two-year salary-freeze is over. He said in a memo to his staff that the move 'reflects both the company's improved financial performance and our confidence in Merrill Lynch's future'.
It seems that the firm will initially focus on staff who have base salaries of less than $100,000 per annum. As for the rest, as O'Neal has said, they should see a recognition of their performance in their year-end bonus.
Staff will look forward to see what the lifting of the salary freeze and Merrill's improved performance actually means to them. If Merrill is going to avoid a whole lot of other problems, the firm will now not only have to deliver on its promises, but at the same time effectively manage staff expectations. But, overall, not a bad problem to have. Looks like The Bull is back.