THAIN’S THE MAN
Merrill Lynch tapped New York Stock Exchange chief John Thain yesterday to take over for ousted CEO Stan O’Neal amid mounting losses that have left Wall Street’s biggest brokerage firm demoralized and scrambling to get back on its feet.
The move, first reported by The Post yesterday morning, was welcomed both by investors and many people within the firm. The decision is a huge coup for Merrill board member Alberto Cribiore, who has led the search for a new CEO after O’Neal resigned on Oct. 30.
Cribiore, a native of Italy who runs private-equity firm Brera Capital, is very close to Time Warner boss Dick Parsons, who is, ironically, one of the lead directors at Citigroup searching for a replacement for ousted CEO Chuck Prince.
Many outsiders believed that BlackRock chief Laurence Fink was close to taking the Merrill job and that Thain would take the reins of Citi. Fink was seen having lunch last week at Midtown restaurant San Pietro with former Merrill boss David Komansky, fueling further speculation.
Merrill officials said yesterday that they never offered Fink the job and one source familiar with the matter said Fink is unlikely to take the Citi post.
While Thain was contacted for both positions, the former Goldman Sachs president was said to prefer a smaller, more focused organization like Merrill rather than a huge financial supermarket like Citi.
Thain starts on Dec. 1.
In an interview on CNBC yesterday, Thain, 52, said he wouldn’t rule out further write-downs at Merrill, but said the firm’s wealth management and investment banking businesses were performing well. As the former head of Goldman’s mortgage business, Thain said he had the right skills to fix the problems that have plagued Merrill.
Since taking over the NYSE in 2004, Thain has successfully transformed the exchange from a non-profit membership organization into a global public company. The move required political deftness in dealing with exchange’s entrenched membership, which had been rocked by the scandals that plagued the reign of former chief Dick Grasso.
Thain will now have to convince Merrill’s giant brokerage force that he is the man to right the ship.
“Merrill needs someone to make people feel empowered and respected, post-O’Neal,” said one former manager. “Mother Merrill means something to many people there.”
Thain is known as a very accomplished dealmaker who pulled off a difficult battle against Deutsche Bourse to gain control of pan-European stock exchange Euronext last year.
O’Neal lost the confidence of Merrill’s board after reporting a third-quarter loss of $2.24 billion, or about six times more than he acknowledged on Oct. 5. The shocking losses came from $8.4 billion of write-downs for subprime mortgages, asset-backed bonds and bad loans.
Merrill’s latest result was the biggest quarterly debacle in the history of the securities industry. The shares have lost one-third of their value in the last five months as rising U.S. subprime mortgage defaults led to a credit-market freeze in August.
Shares of Merrill rose about 2 percent to $57.98.