Merrill Plans Brokerage Cuts; Co-President Resigns
As the new Merrill Lynch Chief Executive John Thain shuffles his management team, the firm has embarked on a cost-cutting initiative that will likely lead to layoffs in its brokerage operations, the largest on Wall Street, sources tell CNBC.
Meanwhile, Merrill announced late Monday that Amass Fakahany, Merrill Lynch co-president and a key ally of former CEO Stan O'Neal, is leaving the company.
Fakahany is widely regarded as one of the key architects of Merrill's strategy of ramping up balance sheet risk by holding risky bonds packed with subprime mortgages that led to its writedown of more than $14 billion.
Merrill's brokerage department chief, Robert McCann, is conducting a massive review of the department's costs that will likely lead to layoffs, according to one person with knowledge of the matter.
The layoffs, however, aren't expected to touch at least initially the firm's 16,610 brokers, but will focus on other personnel, this person said.
McCann has been remaking the brokerage division following O'Neal's resignation. He recently replaced a key executive in the brokerage department who was close to O'Neal, a sign people inside the firm say, of his growing clout with Merrill's new Thain-led management.
Thain took the job after Merrill's board ousted O'Neal following the massive writedowns. Thain recently announced that the firm has cut 900 jobs from its work force, and more are likely on the way.