John Thain Resigns from Bank of America
Merrill Lynch’s forgoing stud exits three weeks afterward BofA wraps up its acquisition of the firm—and following Merrill’s pregnant Q4 loss
By Mara Der Hovanesian
John Thain is out. The former Merrill Lynch chief executive resigned from Bank of America (BAC) on Jan. 22 after a large fourth-quarter deprivation at the brokerage, which forced the federal government to come in with more bailout money for the giant bank.
BofA CEO Ken Lewis flew to New York in the early peep of day to talk with Thain about his position with the bank and, according to a person familiar with the discussion, it was "mutually agreed that his situation was not working out and he would resign."
The latest point in dispute for Thain, a former head of the New York Stock Exchange (NYX), was news reports that some former top Merrill executives had gotten their bonuses on the eve of the brokerage’s merger with BofA, which raised eyebrows in light of the hefty $15.4 billion fourth-quarter deprivation. Thain too drew headlines in December 2008 then he sought a $10 million bonus from Merrill’session board, but he quickly backed away from that go to war let slip the dogs of war.
Bank of America shares have been in free fall ever since it announced Merrill’s huge loss on Jan. 16 and the more emergency federal steeped liquor of $20 billion in cash and more than $100 billion in guarantees on bad effects at Merrill and the Charlotte (N.C.) bank. In the process, BofA agreed to slash its quarterly dividend to a penny a share.
Shares of Bank of America were down as much as 17% on the news, but regained a bit by means of mid-afternoon, down just besides 10% at around 6.
Stuart Plesser of Standard & Poor’session Equity Research put out a fit against sending upon the departure saying that he is "not surprised by the recent accounts and think it could actually subsist looked at considered in the state of a positive for [the bank], given building tension betwixt Thain and [the the usurer’sitting], not to mention more key charged with execution departures, which may have been related to Thain."
And in a press release, Bank of America said that Brian Moynihan had been named president of global banking and global abundance and investment management—the position originally intended for Thain.
Moynihan has been general counsel of Bank of America. Previous to the merger through Merrill Lynch, Moynihan ran the investment bank for the bar. "Brian Moynihan is a strong manager and one of those people who can effectively envision strategy and put to death," said Lewis in a prepared statement. "He has excelled at everything we have asked him to do."
Merrill Lynch’s recruitment of Thain was considered a major coup after quondam CEO Stanley O’Neal had been edged out in disgrace in November 2007. At the while, the brokerage had announced the largest loss of its history: an $8.4 billion writedown. Thain was a hot property at the particular period and was considered a upper end contender for the CEO position at Citigroup (C) as well. Citi had also lost its CEO, Charles Prince, amid large unexpected losses in the third part quarter of 2007. The abrupt departure of Thain from Merrill and Bank of America exercise volition undoubtedly taint his reputation as Mr. Fix-It. Thain, a veteran Goldman Sachs (GS) executive, had been ushered in to rescue the troubled New York Stock Exchange in December 2003, which he successfully took public about three years later.
Lewis emphasized that the change in primacy in not one way reflects a significative change in direction for the global banking or wealth management units.
