Mr Tsang, who previously worked for Merrill Lynch in the '90s, will be charged with winning trade from the private sector, which Merrill has targeted as a growth area after the success of last year's Nine Dragons IPO deal.
His appointment, which comes in the same month that Merrill hired Margaret Ren to head up its investment banking team, sees the US bank further expand its operations in the region.
Mr Tsang made his name at Swiss bank Credit Suisse where he was instrumental in securing deals with advertising agency Focus Media and property developer Guangzhou R&F.
It is thought that the decision to hire him is influenced by the veteran's bankers experience in seeking out principal investments for banks, as the role of banker in the region shifts away from simply acting as a corporate financier.
Merrill recorded the fifth highest annual revenue for an investment bank in China last year, as the total investment banking revenue in the region rose a massive 65 per cent to $1.3 billion.