The credit market crisis is forcing Wall St firms to rip up even some of their best-laid plans.
The latest example is Merrill Lynch's decision to postpone the building of a new skyscraper in midtown Manhattan.
The investment bank is understood to have asked for an extension of
its downtown lease, calculating that it needs to use its money to rebuild its balance sheet. Merrill Lynch admitted it lost US$7.9 ($10.2) billion on ropey sub-prime mortgage investments in just three months last year, and ousted its chief executive Stan O'Neal in November.
Its new boss, John Thain, has shelved talks on plans to demolish a hotel opposite Manhattan's Penn railway station and replace it with a Merrill Lynch tower. Those plans were reportedly so far advanced last autumn that they were ready for board approval, but O'Neal's resignation disrupted the timetable.
Thain has decided that Merrill should not commit millions of dollars upfront to a project that will not be complete at least 2012, even though employees have been complaining about outdated trading floor facilities.
A five-year extension to the existing lease is under discussion, extending Merrill's commitment to downtown Manhattan until 2018, according to people close to the talks.
Grandiose spending plans are being replaced by hair-shirt policies across Wall St, as financial institutions are forced to conserve cash and even seek rescue financing from outside investors. Merrill itself tapped the Singapore government for a $4.4 billion investment.
- Independent
