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Merrill Lynch chief leaves firm Merrill Lynch chief leaves firm
(10 minutes later)
Merrill Lynch has parted company with its chief executive Stan O'Neal.Merrill Lynch has parted company with its chief executive Stan O'Neal.
The US bank said Mr O'Neal had retired with immediate effect, in a move that followed intense media speculation that the 56-year-old would be leaving.The US bank said Mr O'Neal had retired with immediate effect, in a move that followed intense media speculation that the 56-year-old would be leaving.
Calls for his departure grew last week after the firm was forced to admit a $7.9bn (£3.85bn) exposure to bad debt.Calls for his departure grew last week after the firm was forced to admit a $7.9bn (£3.85bn) exposure to bad debt.
The write-off contributed to the firm posting a third-quarter net loss of $2.3bn, its worst financial performance since 2001.The write-off contributed to the firm posting a third-quarter net loss of $2.3bn, its worst financial performance since 2001.
Search committeeSearch committee
Merrill said board member Alberto Cribiore would now chair a search committee to find a replacement for Mr O'Neal, who had been chief executive since late 2002, and chairman since 2003.Merrill said board member Alberto Cribiore would now chair a search committee to find a replacement for Mr O'Neal, who had been chief executive since late 2002, and chairman since 2003.
I'm not going to talk around the fact that there were some mistakes that were made Stan O'Neal Merrill Lynch had a huge misstep in risk management, and someone needed to pay the price David Killian, Stonebridge Investment Partners
Mr Cribiore will also serve as interim chairman.Mr Cribiore will also serve as interim chairman.
Merrill has yet to give any details of Mr O'Neal's severance package, but reports have suggested it could be a multi-million dollar deal.Merrill has yet to give any details of Mr O'Neal's severance package, but reports have suggested it could be a multi-million dollar deal.
Mr O'Neal is paying the price for Merrill's over-exposure to bad debt in the US housing market, most specifically the crisis-hit sub-prime mortgage sector.Mr O'Neal is paying the price for Merrill's over-exposure to bad debt in the US housing market, most specifically the crisis-hit sub-prime mortgage sector.
The firm was one of the first to repackage such sub-prime housing debt into tradable securities.The firm was one of the first to repackage such sub-prime housing debt into tradable securities.
As mortgage defaults in this sub-prime sector hit record highs over the past year, on the back of higher US mortgage rates, the value of these securities plummeted.As mortgage defaults in this sub-prime sector hit record highs over the past year, on the back of higher US mortgage rates, the value of these securities plummeted.
'Lost its way'
Analysts agreed that Mr O'Neal's departure had only been a matter of time.
"Merrill Lynch had a huge misstep in risk management, and someone needed to pay the price," said David Killian of Stonebridge Investment Partners.
"The company totally lost its way in risk management."
Mr O'Neal admitted last week that errors had been made at the company.Mr O'Neal admitted last week that errors had been made at the company.
"I'm not going to talk around the fact that there were some mistakes that were made," he said."I'm not going to talk around the fact that there were some mistakes that were made," he said.
Larry Fink, chairman and chief executive of investment management group BlackRock, is said to a frontrunner to replace Mr O'Neal.
Mr O'Neal is the grandson of a former slave whose father moved his family from the cotton fields of Alabama to Georgia when he was young.Mr O'Neal is the grandson of a former slave whose father moved his family from the cotton fields of Alabama to Georgia when he was young.
He began his career at General Motors. His ability was spotted and he was sent to study at the firm's institute where he gained a degree in industrial administration.He began his career at General Motors. His ability was spotted and he was sent to study at the firm's institute where he gained a degree in industrial administration.
Mr O'Neal later graduated from Harvard with a degree in business administration.Mr O'Neal later graduated from Harvard with a degree in business administration.