Merrill Lynch parted company this week with its CE, Stan O’Neal, leaving the investment bank’s leadership in a state of limbo and prompting unease on Wall Street.
Merrill announced that O’Neal had decided to retire with immediate effect after agreeing with the board that a change in leadership would “best enable Merrill Lynch to move forward”.
O’Neal lost the confidence of the board after the bank ran up liabilities of $7,9-billion in the recent global credit crunch, prompting the worst quarterly loss in its 93-year history. He was criticised for failing initially to reveal the extent of the problem and for making a behind-the-scenes merger approach to a rival bank, Wachovia.
O’Neal has hired a top New York remuneration lawyer to negotiate his severance terms and he is expected to leave with $160-million in shares and options built up over his four-year tenure.
The bank’s shares slid by nearly 4% on uncertainty about its future leadership. Merrill is yet to appoint a successor to O’Neal, instead installing a temporary management structure that sparked speculation of an internal power struggle.
Italian private equity magnate Alberto Cribiore is to stand in as interim non-executive chair and will head a search committee to find a new CE. Day-to-day operations will be handled by its two chief operating officers, Ahmass Fakahany and Gregory Fleming.
O’Neal is the biggest Wall Street casualty to date from the sub-prime mortgage crisis, sparked by defaults on home loans that were offered to less affluent Americans, a problem which developed into a global meltdown in the credit markets. — Â