This morning's Wall Street Journal's Money & Investing section has, as its lead story, a handicapping of contenders for the top job at Merrill Lynch, now that Stan O'Neal has been cashiered for incompetence.
Despite the stories circulating about his call to the CEO of Wachovia about a possible merger, it seems far more believable that O'Neal is going simply because he proved himself unable to appropriately manage Merrill's growth without incurring disastrous risks which have resulted in losses of $8B so far this year. And it's only the end of October.
Among the putative replacements for O'Neal, the Journal article mentions,
"A dream pick would be Mr. Thain, CEO of NYSE Euronext.....However, people close to him have thrown cold water on the speculation he may throw his hat in the ring for the Merrill job. One reason: he may be holding out for a bigger job, possibly the top spot at Citigroup, Inc., although it currently isn't open.
Gary Cohn and Jon Winkelried, co-president and chief operating officers of Goldman, Sachs, could be wild cards in the race."
Geez....dream pick, indeed. Does anyone, besides Susanne Craig, who authored the Wall Street Journal piece, really think Goldman executive among the top three managers of the firm, past or present, would really be interested in running Merrill?
Merrill represents the last of an otherwise dead model, the retail wire house. Sure, Merrill bought and grafted on investment banking in the past decade. But it hasn't internalized the risk management skills which seem to have prevented Goldman Sachs, Morgan Stanley, and Blackstone from suffering the same losses during this year's financial crises.
As for Citigroup, it's the worst example of the hydra-headed model now known as a 'universal bank,' the former moniker, 'financial supermarket,' evidently being dropped sometime in the past decade.
Neither Merrill, nor Citigroup, has a reputation for attracting and retaining the best financial minds. Nor, for that matter, do any other large US commercial banks.
Why would a senior executive who has run part or all of Goldman Sachs need to prove himself running a less-robust financial services business model with less talented personnel?
For Larry Fink, on the other hand, it would represent an opportunity to run a larger, more complex operation than he has had to date. If the inherent problems in Merrill's structure, including the dying retail brokerage business, don't cause him to think twice.
Should be interesting to see who wants the top job at Merrill. An insider, such as McCann or Fleming, is understandable- the move would be a natural accession and bring more money. For an experienced, capable outsider, though, the job might ultimately hold more risk than opportunity.
Perhaps the most interesting aspect of O'Neal's departure is whether it speeds Chuck Prince's outster at nearby Citigroup.
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