John Thain, Merrill Lynch's incoming chairman and CEO, is certainly qualified for the challenges of restoring morale, credibility and profits to the firm.
A former Goldman President and change-agent chairman of The New York Stock Exchange, Thain takes up his new responsibilities on December 1st. The 52-year-old is a former mortgage-bond trader, and said that he has joined a 'great franchise' at Merrill, a firm that's 'got one problem area - and I know a lot about that area' (the firm has written-off $8.4bn in the third-quarter in assets related to subprime lending). Thain's appointment appears to have ticked most of the boxes, although some Merrill alumni are apparently not too happy that he is to take charge. Rumoured to be on a $100m bonus if he succeeds in turning the Mothership around, Dealbreaker reports that not everyone is best pleased a former Goldman exec is now at the helm. The website quotes one unnamed former senior Merrill executive, who said that 'I was shocked that the board went with someone with no connections with Merrill's culture'. Another is quoted saying that 'there's still a lot of institutional memory that they could have tapped. Instead the board decided it wants to be Goldman Sachs'.
Outside the firm, however, the appointment has been widely applauded. Reuters quotes David Katz, chief investment officer at Matrix Asset Advisors, who said that 'we believe he would be a very good team builder and unifier, as well as operator'. Thain's most immediate tasks will be to ensure that key staff remain with the firm, and to beef up its risk management procedures. Rumours are already flying that staff numbers will be cut across the board, and that some executives appointed by O'Neal could be on the way out. Coupled with some staff being elbowed out, Thain is also intent on buying in some senior management in sales and trading. 'On the sales and trading side, we probably are going to add some senior management to help. There is plenty of talent on Wall Street right now, and I'm already getting plenty of cvs'. Thain, it seems, will have to keep up morale at the same time as he is breaking a few eggs.
Merrill's new boss also confirmed that he had had discussions about the Citi CEO role, but declined to say whether he had actually been offered the job.
In the meantime, everyone is interested in what happened to BlackRock founder Larry Fink (Merrill owns 49% of BlackRock), who seemed a shoo-in for the Merrill job until as late as Wednesday. Larry, so it appears, may have overplayed his hand. Although Merrill says that it never actually offered him its top job, many feel that Fink was taking too long to signify a real interest in it, and that the Merrill board got miffed, eventually turning to Thain instead. Fink told BlackRock employees Thursday that 'I am honoured to serve as BlackRock's chairman and CEO, and I am fully and exclusively focused on and committed to BlackRock'. So there.