Merrill Lynch & Co said on Wednesday it has named New York Stock Exchange head John Thain to lead the world's largest brokerage through the unfolding credit market turmoil that threatens Wall Street's biggest investment houses.
Thain, 52, has been selected to become Merrill's next chairman and CEO. His appointment comes just two weeks after the ouster of Stan O'Neal as Merrill reported a US$2.24 billion loss during the third quarter, the largest in its 93-year history.
The New York Stock Exchange said on Wednesday that it named Duncan Niederauer chief executive. Niederauer, 48, joined the NYSE in April after serving as co-head of equities trading at Goldman Sachs.
Thain's first day as Merrill's new chief is Dec. 1.
"I am excited and honored to have the opportunity to lead such an outstanding organization," Thain said in a statement. "I am certain that together we can continue to grow Merrill's global business and add value to our customers and our shareholders."
Thain is no stranger to the investment world. He's credited with remaking the NYSE into the world's first truly global exchange. He started out on the bond desk at Goldman Sachs Group Inc and left the firm as its COO.
Many say his reputation as a consensus builder is exactly what Merrill Lynch needs now. O'Neal, Merrill's former CEO, was not well liked by its army of some 16,000 brokers, and lost their confidence after the company recorded the third-quarter loss.
Alberto Cribiore, Merrill Lynch's interim non-executive chairman who headed a search committee to find a new CEO, said Thain is "the right person to become the new chairman and CEO."
Merrill Lynch ratcheted up a huge loss during the third quarter because of investments in subprime mortgages and other risky types of debt. It joined dozens of other major financial institutions who are getting squeezed as investors steer away from riskier securities, causing credit markets to tighten significantly.
There is also speculation by a number of analysts that Merrill may take a US$3 billion fourth-quarter writedown. That would be besides the US$7.9 billion charge taken last quarter. Merrill originally said it would write down only US$4.5 billion because of the credit crisis.
Thain faces a daunting task of cleaning up those investments, and reviving morale at a firm badly bruised during the past few months. There has been speculation that a new CEO would be forced to turn around Merrill's fixed income division, a department that he once ran for Goldman in the 1990s.
The announcement was unexpected since many insiders on Wall Street thought Merrill would select BlackRock Inc CEO Larry Fink.
O'Neal had dinner with Fink just days before retiring from Merrill Lynch and approached Fink about becoming his successor -- and Fink had been in talks ever since.
Fink, could not be reached for comment, but a spokesman for Merrill Lynch said: "Fink was never offered the job."
Still, Fink might be up for another job in a game of musical chairs on Wall Street.
Industry watchers had pointed to Fink as a possible replacement for Charles Prince, who left the helm of Citigroup Inc on Nov. 4, less than a week after O'Neal stepped down from Merrill. Thain was also said to have been considered as a candidate for the Citi job.