Merrill exec sees non-U.S. revenue growing

NEW YORK (Reuters) - Merrill Lynch & Co. (MER.N: Quote, Profile, Research, Stock Buzz) expects 75 percent of its global markets and investment banking revenue to come from outside the United States in five to seven years, a top Merrill executive said on Monday.

Gregory Fleming, president of global markets and investment banking at Merrill Lynch, said his unit currently draws more than 50 percent of its revenue from outside the United States as wealth creation surges in places like China, India and Turkey.

"In our view, this (non-U.S. revenue) will go to 75 percent-ish in the next five to seven years, 10 years at the outside," Fleming said at the Reuters Investment Banking Summit in New York. "This is a secular not a cyclical trend."

The international market is growing much faster than in the United States for Merrill Lynch business lines that include fixed income, currencies, commodities, equity trading and investment banking.

Since 2002, revenue in Merrill Lynch's GMI business from Europe, the Middle East, Asia and the Pacific Rim has increased about two-and-a-half times, the company said.

"All of these areas are experiencing rapid (gross domestic product) growth, and therefore, relatedly, rapid growth in the investment banking business," Fleming said.

Fleming said he does not agree with some analysts who believe Merrill Lynch needs to acquire a commercial bank to bolster its pure investment banking model. European financial institutions use commercial bank lending to help win investment banking business.

"We don't feel constrained by size in competing in the investment banking business," Fleming said. "The concept, or notion, that we need to do a commercial banking deal to defend the institutional investment banking business, we don't agree with."

But Merrill Lynch is comfortable with continuing to make acquisitions that supplement its organic growth. Seen as a weak player in the oil-and-gas industry mergers and acquisitions, Merrill Lynch last month agreed to acquire Petrie Parkman & Co., a boutique investment banking firm that specializes in those deals in North America.

"We want to be one of the top three or five firms wherever we're competing," Fleming said.