Merrill Executive One Step Closer To Departure

by Stewart Douglas

Story link: Merrill Executive One Step Closer To Departure

Investment bank Merrill Lynch is today rumoured to be one step closer towards parting company with its under-fire chief executive officer Stan O’Neal in light of its recent substantial losses arising from exposure to the troubled sub-prime lending sector.

According to sources close to the company reported in the US media, the Merrill Lynch board have already sealed Mr O’Neal’s fate, deciding over the course of the last few days that he should leave the company over his part in the substantial writedowns that saw the company report a loss for the period.

Meanwhile Merrill Lynch officially has yet to make any announcement as to the future of Mr O’Neal, and indeed the executive himself has remained silent on the issue over the last few days.  However amidst growing calls and speculation in the investment banking sector, it now looks likely that O’Neal will forgo his position in the next few days.

The move comes off the back of record writedowns, recorded to the tune of $7.9 billion over the third quarter to reflect losses from investments within and linked to the US sub-prime mortgage lending sector and the recent problems in that sector over the last few months.

As a result Merrill recorded a loss of $2.3 billion for the third quarter alone which marked the worst performance of the bank for over six years, five of those under the leadership of Mr O’Neal which looks to have finally come to an end as a result of overly risky decision making in the bank’s investment operation.

The news of O’Neal’s dismissal, when it is finally received, is likely to benefit Merrill share prices as a sign that the company has turned the corner with the view to attaining profitability over the final quarter and the year end.

It is thought that O’Neal will receive a golden parachute worth multiple million dollars when he steps down, given his high stature in the company and overall importance in economic terms.