Merrill Lynch chief executive forced out over bonus row
New York - The hangover of Bank of America's (BoA) shotgun wedding to Merrill Lynch organised in September 2008 continues. John Thain, the chief executive officer of Merrill Lynch until its formal takeover by BoA on January 1, was sacked as a result of bad publicity surrounding a decision to pay Merrill executives $4 billion in employee bonuses one month early, at the end of December.
Thain, who maintains BoA was fully aware of the decision and involved in discussions, also received additional negative publicity thanks to the leaking of the $1 million cost of the refurbishment of his Merrill Lynch office. According to press reports, BoA says it was informed of the decision to give bonuses early, but was not party to it.
The bonus news came on the heels of BoA's announcement of a $15.3 billion loss related to its acquisition of Merrill Lynch. Although BoA had announced profits of $4.01 billion for 2008, the Merrill Lynch loss had already forced it to apply for debt protection from the US Treasury.
BoA's 2008 results include its purchase of Countrywide Financial on July 1 2008, but not the Merrill deal, which took place officially on January 1, 2009.
The Treasury and Federal Deposit Insurance Corporation (FDIC) has offered to guarantee $118 billion of debt held by Bank of America in loans, securities backed by residential and commercial real estate loans and other assets, marked to current market value. The Treasury is also investing a further $20 billion directly through its Troubled Asset Relief Program in exchange for preferred stock, offered with an 8% dividend.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Barr defends easing of Basel III endgame proposal
Fed’s top regulator says he will stay and finish the package, is comfortable with capital impact
Bank of England to review UK clearing rules
Broader collateral set and greater margin transparency could be adopted from Emir 3.0, but not active accounts requirement
The wisdom of Oz? Why Australia is phasing out AT1s
Analysts think Australian banks will transition smoothly, but other countries unlikely to follow
EU trade repository matching disrupted by Emir overhaul
Some say problem affecting derivatives reporting has been resolved, but others find it persists
Barclays and HSBC opt for FRTB internal models
However, UK pair unlikely to chase approval in time for Basel III go-live in January 2026
Foreign banks want level playing field in US Basel III redraft
IHCs say capital charges for op risk and inter-affiliate trades out of line with US-based peers
CFTC’s Mersinger wants new rules for vertical silos
Republican commissioner shares Democrats’ concerns about combined FCMs and clearing houses
Adapting FRTB strategies across Apac markets
As Apac banks face FRTB deadlines, MSCI explores the insights from early adopters that can help them align with requirements