Merrill Boss Out

by Stewart Douglas

Story link: Merrill Boss Out

Investment bank Merrill Lynch has today announced that chief executive Stan O’Neal has retired from his position, as effective immediately in light of the company’s substantial losses in the third quarter derived from its sub-prime exposure.

Mr O’Neal had been very much underfire from a policy point of view, with market analysts and the media calling for his resignation for some time to restablise Merrill at the centre of the investment banking market following its forced blunder.

The firm has announced that the search for his replacement is already underway, chaired by fellow board member Alberto Cribiore who will step up to the plate as acting chief executive until a new leader is appointed.

The announcement follows significant losses over the third quarter, totalling some $2.3 billion as a direct result of a massive $8 billion writedown in respect of now worthless sub-prime sector linked investments.

With the crash of the sub-prime market came the extent of Merrill’s over exposure, leading to the worst quarterly performance reported by the company in over six years throughout the reign of Mr O’Neal as a direct result of the losses it had sustained.

The 56 year old executive carries a generally good reputation, seeing Merrill through over five years in control during a period which saw growing profitability, improving his stature and standing in the commercial world.

However, it is unlikely that even O’Neal could have forecast his innovative involvement in the sub-prime sector would be both profitable and his fall from grace at the helm of Merrill Lynch.

Whilst his terms were not specified, it is likely that O’Neal parted with a significant multi-million dollar package to see him off through early contract termination.