Talk about timing. Last Thursday, as rumors swirled that Chase Manhattan Corp. had set its sights on Merrill Lynch & Co., one Merrill executive found himself in the perfect setting to make light of the gossip.

John H. Gay, a first vice president who advises the firm on corporate strategy, appeared before a gathering of bank and financial analysts in New York. His topic: commercial banks buying into investment banking.

Mr. Gay knocked the trend, saying more competition would eat into profits. And at the end of a slide show, he slipped in a visual riposte.

Displaying five financial institution logos, he asked for a show of hands from the audience to identify Merrill's. Choice No. 2 was the corporate emblem for none other than Chase.

The correct answer, it turned out, was "none of the above." Merrill's trademark bull was stomping and snorting on the screen, but backward.

Mr. Gay said he didn't care whether analysts picked up on that gaffe. But, he added, "I'm very glad you didn't pick No. 2."

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