Memo to Merrill Lynch bankers: if the global head of markets fails to recognise you when he passes you in the corridor, it is nothing personal. It is just that 43-year-old Dow Kim has built a division that is unrecognisable from the one he inherited three years ago and growth has been so fast he is still getting to know people.

When Kim took over as head of global markets in August 2003, the bank was coming to terms with the deepest cost-cutting programme on Wall Street. In two years, the bank had shed more than a third of its staff globally and there was tension between its US and European divisions. As the market recovered, Kim began to rebuild. More than 2,500 people have been hired to work in the global markets and investment banking business over the past two years – 300 at the managing director and director levels. Results are improving. The global markets and investment banking unit increased pre-tax profits by 30% in the first nine months of this year, contributing nearly two thirds of Merrill's profits before tax. Kim's global markets business produced 80% of the investment bank's revenues. Kim claims success is down to the strategy he implemented soon after he became head of markets. He said: "The solution over the past three and a half years has been to build a more diversified business. Our strategy hasn't changed over that time and it won't change going forward." Kim has also been in the senior ranks as the bank has sought to lose its reputation as one of the most political firms on Wall Street. Its management team, lead by chief executive Stan O'Neal, is stable and reporting lines are flat. The bank's European business is free to approve loans, set compensation and rubber-stamp promotions in a mark of autonomy that would have been unheard of in the past. While US global markets and investment banking revenues have risen 22% year on year, Europe and Asia have reported a 45% increase. The region accounts for 51% of markets and investment banking revenues. European bankers say the most obvious internal recognition of success has been in changes made to the selection process in the annual managing director promotion round. When Merrill announces the names of its new managing directors on December 19, the European management team will have more say then ever before about which of its staff to promote to the coveted position. While the bank insists the promotions are made as part of a global decision making process, bankers in Europe claim the significance of the move should not be underestimated. One managing director said: "You've seen a raft of changes this year but this is probably the most important because it puts Europe on an equal footing with the US business. This is the biggest sign yet that power is shifting across the Atlantic." Kim claims the performance of the European business is a reflection of better market conditions and claims the appointment of London-based Osman Semerci as global head of a new fixed income, currencies and commodities business in July was because of his success rather than any geographic preference. Semerci was appointed as part of a reorganisation in which three global markets bankers lost their jobs and promotions were made across the business. Merrill Lynch has had a reputation for investing heavily in its investment banking business when markets are performing well and cutting jobs and costs sharply with any downturn. That is a reputation its bankers have worked hard to lose this year. Kim said: "When the reorganisation was implemented, people internally were surprised because, if you look at the history of Merrill, we usually make big changes like this when things have gone wrong. But things are different now. Our culture has evolved to become more aligned towards meritocracy." Merrill Lynch bankers claim the best way to see the differences between Kim and Greg Fleming, his co-head of investment banking, is to listen to one of the US bank's town hall meetings. Fleming talks at length and is comfortable speaking to hundreds of people. By contrast, Kim is a man of few words. One banker said: "When Dow gets up, you know this is the stuff that really matters because then it's all about who is making money and who is not." Kim keeps a low profile on Wall Street. Born in South Korea and educated in the US, he has headed the bank's global markets business since 2003 and is the driving figure behind the investment bank's profit growth, according to colleagues. They describe him as tough, driven, taciturn and numbers-focused but all agree he produces results. As a former trader, he's also not afraid to take risks. He said: "We have been increasing risk because there is no other choice. Clients want us to take more risks. We have been building our risk-taking capabilities in all disciplines – flow trading, principal investments, private equity and proprietary trading. But we're doing it in a sensible way." He cites investment in the commodities and derivatives markets. The first, through the $800m (€605m) acquisition of Entergy-Koch Trading, signalled Merrill's return to the commodities sector, while the growth of the underperforming derivatives business was carried out through large scale hiring, most notably with a 20-person team from JP Morgan. Kim says the bank will continue to invest in derivatives, in which he wants Merrill to be a market leader, as well as in its alternatives investment business. Merrill took a stake in October in DiMaio Ahmad Capital, a hedge fund set up last year by Jack DiMaio, formerly of Credit Suisse. Kim says he expects to make further investments of that kind. Kim admits to missing the buzz of trading but points out while he no longer sits on positions that could win or lose him hundreds of millions of dollars, he is taking risks. He said: "For the last three and a half years I have been taking calculated risks, not just in the markets but with the business. Hiring Rohit D'Souza to manage global equities was a calculated risk, the commodities acquisition was a calculated risk, the reorganisation was a calculated risk, the First Franklin deal was a calculated risk. These are the kinds of risks you have to take to push a business forward." But the drive to develop the business will slow, not least because most of the obvious gaps have been filled. Kim maintains, though, the bank has not over- invested in any one business. Only with a global downturn will the markets see whether Merrill's culture has changed but Kim appears to be taking the right approach, vital to which is compensation, he said. Having earned a reported $22m in 2004, he is well positioned to know. One change has been to instigate a policy of rewarding its bankers for what Kim calls "bundled origination" or bringing in business through different product lines. Kim says: "Bankers are now focused on what we define as non-traditional origination. We have created the right incentives to make sure they focus on those opportunities and that is part of the reason why our growth has accelerated." This is an area Kim takes seriously, estimating that he spends more than 60% of his time in meetings with his employees or on recruitment, diversity or hiring drives.