http://uk.us.biz.yahoo.com/ap/090122/bank_of_america_merrill_lynch.html

AP
Thain resigns from Bank of America
Thursday January 22, 3:33 pm ET
By Stephen Bernard and Ieva M. Augstums, AP Business Writers
Former Merrill Lynch CEO John Thain resigns from Bank of America after news of bonuses


NEW YORK (AP) -- Wall Street bonuses, a sore point as the government gives billions of dollars in bailout money to the financial industry, have apparently cost former Merrill Lynch & Co. CEO John Thain his new job at Bank of America Corp.
Thain resigned from Bank of America Thursday following news that Merrill Lynch had rushed out its year-end bonuses, paying them just before Bank of America completed its acquisition of Merrill Lynch and sought $20 billion in additional

The company gave no reason for Thain's departure, but its timing, coming hours after news reports about the bonuses, made it likely that there was a connection with the payouts.

The bonuses to Merrill Lynch executives were also paid out as the company prepared to report a $15.3 billion fourth-quarter loss -- a loss that led Bank of America to request and receive government funds on top of the $25 billion it had already been given.

Bank of America spokesman Scott Silvestri issued a terse statement: "(BofA Chairman and CEO) Ken Lewis flew to New York today to talk to John Thain. And it was mutually agreed that his situation was not working out and he would resign."

The bonuses raise the question of how proper it was for executives in a struggling company to be given big payments even as its soon-to-be-parent was accepting billions of dollars in government money.

"He's just completely tone-deaf to the culture of BofA" if he was paying out bonuses days before reporting a multibillion dollar quarterly loss and as Lewis was securing more government support, Tony Plath, a finance professor at the University of North Carolina at Charlotte, said about Thain. "My surprise is the board gave him an opportunity to resign and didn't just fire him."

Silvestri said Bank of America was informed of Thain's decision to grant the bonuses. It was not immediately known what fallout from the bonuses there might be for Lewis.

"Merrill was an independent company until Jan. 1 of 2009," Silvestri said. "John Thain decided to pay year-end incentives in December, as opposed to their normal date in January. Bank of America was informed of his decision."

Bonuses were not paid to Thain and four other top executives -- President and COO Greg Fleming, Chief Financial Officer Nelson Chai, President of Global Wealth Management Robert McCann, and General Counsel Rosemary Berkery -- who requested they not receive additional compensation.

Charlotte, N.C.-based Bank of America has increasingly come under criticism in recent weeks for its acquisition of Merrill Lynch, a deal fostered by the government to save Merrill Lynch on the same day that Lehman Brothers Holdings Inc. collapsed amid the ballooning credit crisis.

There is also concern among government officials about banks that have received bailout funds still going ahead with yearend bonuses.

New York Attorney General Andrew Cuomo's office has started an investigation into the "secret, last-minute" bonuses paid out by Merrill, according to an individual familiar with the investigation who asked for anonymity because it is ongoing.

Thain was heading a wealth management division of the two firms' merged businesses. Some analysts expected him to leave at some point soon even without the bonus issue -- when two huge companies link up, the usual turn of events is that one of the CEOs from the standalone companies departs.

"It's hard to see Ken Lewis and John Thain together in a working relationship," said Gary Townsend, president of private investment group Hill-Townsend Capital. "Thain is the quintessential Wall Street fellow. Lewis spend a lot of time on Wall Street and hated the experience."

Lewis, in the past, has spoken out about his dislike of the investment banking business. In October 2007, after Bank of America posted a 32 percent drop in third quarter profit, hurt heavily by investment banking results, Lewis said: "I've had all of the fun I can stand in investment banking at the moment. So to get bigger in it is not something I really want to do."

Soon after the announcement of Thain's departure, Bank of America named its general counsel, Brian Moynihan, to succeed him.

With Thain gone, Paul Miller, an analyst at Friedman, Billings, Ramsey & Co., said Lewis is likely to wind down many parts of Merrill's operations as he integrates the investment bank.

Lewis picked up Merrill with his eyes on the retail brokerage business, Miller said. Internally, Bank of America has spent heavily in recent years to build out an investment banking group, but it was still much smaller than Wall Street peers.

While retail brokerage might be appealing to Lewis and Bank of America, Miller said the riskier parts of the business are likely to be shut down, possibly including the fixed income and structured finance divisions.

Shares of Bank of America, which were already tumbling Thursday, fell further after reports of Thain's departure, but later regained ground. Bank of America shares fell 52 cents, or 7.8 percent, to $6.16 in afternoon trading.

Bank of America shares have been among the hardest hit in the sector throughout the first few weeks of 2009. Its shares had already sunk 52.6 percent in 2009 before Thursday's fall.

Thain went to Merrill Lynch, which like other financial companies was struggling because of its investments in soured mortgage back securities, after leading the New York Stock Exchange. Before that, he served as chief operating officer at Goldman Sachs Group Inc.

AP Business Writer Ieva M. Augstums reported from Charlotte, N.C.

 

Merrill doled out multi-billion bonuses before BofA takeover

Merrill Lynch, in an unusual move, expedited bonus payouts by a month last year, doling out billions of dollars to staff just three days before the completion of its takeover by Bank of America, according to report in the Financial Times.

Merrills compensation committee endorsed the bonuses on December 8, three days after the deal was given the go-ahead by Merrill and BofA shareholders. The payments happened on December 29 - far earlier than previous years, sources said, as cited in the FT report.

http://www.ft.com/cms/s/0/378a38d4-e814-11dd-b2a5-0000779fd2ac.html?nclick_check=1>

Merrill Lynch took the unusual step of accelerating bonus payments by a month last year, doling out billions of dollars to employees just three days before the closing of its sale to Bank of America.

The timing is notable because the money was paid as Merrills losses were mounting and Ken Lewis, BofAs chief executive, was seeking additional funds from the governments troubled asset recovery programme to help close the deal.

Merrill and BofA shareholders voted to approve the takeover on December 5. Three days later, Merrills compensation committee approved the bonuses, which were paid on December 29. In past years, Merrill had paid bonuses later usually late January or early February, according to company officials.

Within days of the compensation committee meeting, BofA officials said they became aware that Merrills fourth-quarter losses would be greater than expected and began talks with the US Treasury on securing additional Tarp money.

Last week, BofA said it would be receiving $20bn in Tarp money, in addition to the $25bn that had been earmarked for it and Merrill last year. It was then revealed that Merrill had suffered a $21.5bn operating loss in the fourth quarter.

Despite the magnitude of the losses, Merrill had set aside $15bn for 2008 compensation, a sum that was only 6 per cent lower than the total in 2007, when the investment banks losses were smaller.

The bulk of $15bn in compensation was paid out as salary and benefits throughout the course of the year. A person familiar with the matter estimated that about $3bn to $4bn was paid out in bonuses in December.

Nancy Bush, an analyst with NAB Research, described the size of the 2008 Merrill bonus payments as ridiculous.

BofA said: Merrill Lynch was an independent company until January 1 2009. John Thain (Merrills chief executive) decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision.

BofA declined to specify when Mr Thain informed the bank of his decision.

A source familiar with the matter says Mr Thain, in the weeks leading up to the December 8 compensation committee meeting, had been weighing the possibility of requesting a bonus of at least $10m for himself before ultimately deciding against such a move.

From: ML COMMS GROUP ALERT

Sent: Thursday, January 08, 2009 5:17 PM

Subject: Greg Fleming to Leave the Firm

A message from John Thain, president of Global Banking, Securities & Wealth Management:

Greg Fleming to Leave the Firm

Dear Colleagues:

Greg Fleming, head of Global Corporate, Commercial and Investment Banking (GCCIB) and former president and chief operating officer of Merrill Lynch, has informed me of his decision to leave the firm to become the Senior Research Scholar and Distinguished Visiting Fellow at Yale Law School.

Greg was appointed president and chief operating officer of Merrill Lynch in June of 2007. Greg displayed tremendous leadership during a very difficult environment for both the firm and the industry and was instrumental in helping guide Merrill Lynch through a number of challenging events, culminating in negotiations to be acquired by Bank of America. I also want to thank Greg for his work during the merger transition in helping to establish an outstanding platform and leadership team for the Global Corporate, Commercial and Investment Banking Group.

Greg told me: "Merrill Lynch has been my professional home for the past 16 years, and I leave with mixed emotions. I have tremendous respect and admiration for the company, its culture, my colleagues and our clients around the world. As difficult as this decision is, I simply felt that this was the right time for me to look toward a different set of challenges."

Prior to becoming president and chief operating officer of Merrill Lynch, Greg played a major role in building a top-tier investment bank at the firm. From 2003 to 2007, he was executive vice president and co-president of Global Markets and Investment Banking and also led the Global Financial Institutions Group. He was a managing director of Global Investment Banking from 1998 and ran the United States Financial Institutions Group from 1999 to 2003. He joined the firm in 1992.

Greg has been a friend and mentor to many at Merrill Lynch and I know that you join me in thanking Greg for his service and in wishing him and his family every happiness in the future.

From: ML COMMS GROUP ALERT

Sent: Thu Jan 22 14:27:52 2009

Subject: Moynihan to head Global Banking and wealth management; Montag to report to CEO

Bank of America Transition

January 22, 2009

Moynihan to head Global Banking and wealth management; Montag to report to CEO

Bank of America today announced that Brian Moynihan has been named president of Global Banking and Global Wealth and Investment Management.

Moynihan replaces John Thain who is leaving the company.

The company also said that Tom Montag will continue to run Global Markets and will now report to Ken Lewis, Bank of America chairman and chief executive officer. Montag will also become a member of the Management Executive Team which sets strategy for the company.

Moynihan has been General Counsel of Bank of America. He will occupy that role while the company searches for his replacement. Previous to the merger with Merrill Lynch, Moynihan ran Global Corporate & Investment Banking for Bank of America. Before that, he was President of Global Wealth & Investment Management at the company.

"Brian Moynihan is a strong manager and one of those people who can effectively envision strategy and execute," said Lewis. "He has excelled at everything we have asked him to do." Lewis emphasized that the change in leadership in no way reflects a significant change in direction for the Global Banking or wealth management units.

"Those organizations, which formed the heart of Merrill Lynch, will continue to serve their clients as world class financial service providers," Lewis said. "We are quite happy with their performance since the merger."

Lewis added that, "Tom Montag is getting a well deserved promotion. He has provided strong leadership during our transition so far, and we believe that Global Markets will in the future be a significant profit center for our company."

Moynihan, 49, continues to report to Lewis and be a member of the company's Management Executive Team. He joined Bank of America in 2004, following Bank of America's merger with FleetBoston Financial. At Fleet, he led Brokerage & Wealth Management after leading Fleet's Internet strategy. Before that, he directed the corporation's strategic development for six years, overseeing all mergers and acquisitions. He joined Fleet Financial Group in April 1993 as deputy general counsel.

Montag, 52, joined Merrill Lynch as executive vice president and head of global sales and trading in 2008, prior to the company's merger with Bank of America. Before that, he was with Goldman Sachs Group, Inc., where he was co-head of the global securities business and a member of the company's Management Committee and Equities/FICC Executive Committee. During his 22 years with Goldman Sachs, Montag was co-president of the firm's Japanese operations and co-head of Asian FICC and Equities, before becoming co-head of the global securities business. Earlier in his career, Montag ran the firm's global derivatives business.

http://uk.news.yahoo.com/21/20090124/tuk-minister-slams-banks-over-recession-6323e80.html

Minister slams banks over recession
9 hours 4 mins ago

Labour's minister for the City has launched the Government's most outspoken attack yet on the banks, for their part in causing the economic recession.

Lord Myners blamed "mismanagement" at the banks, where senior executives were "grossly" overpaid and had little sense of the society around them.

He told The Times he could see no economic justification for the "exponential" rises in banking executives' pay over the past 20 years and said that there should be no return to the massive bonuses paid out by the banks.

"The golden days of huge bonuses in the investment banking arms are gone," he told The Times.

Lord Myners also revealed that the banking system came close to a collapse in October last year when the Government stepped in with a £500 billion rescue package to shore up confidence.

"We were very close on Friday, October 10," he said. "There were two or three hours when things felt very bad, nervous and fragile.

"Major depositors were trying to withdraw -- and willing to pay penalties for early withdrawal -- from a number of large banks."

Asked if misbehaving banking bosses should pay back bonuses or lose knighthoods, Lord Myners said "that's a decision for individuals".

He said: "I have met more masters of the universe than I would like to, people who were grossly over-rewarded and did not recognise that. Some of that is pretty unpalatable.

"They are people who have no sense of the broader society around them. There is quite a lot of annoyance and much of that is justified. Let us be quite clear: there has been mismanagement of our banks."

Will if you liked your story you will love this one...

 

John Thains $1.22 Million Redecorating Spree

By Ivy Schmerken
Jan 22, 2009 at 05:47 PM ET

I was surprised by John Thain's sudden resignation from Bank of America where he was the head of global banking, securities and wealth management. Thain is leaving only a week after BofAs acquisition of Merrill Lynch closed on Jan. 1st. This morning, we know this was not a resignation. Thain was reportedly forced out in a showdown with the bank's CEO Kenneth Lewis who was furious about the way Thain handled the surprise $15.31 billion fourth quarter loss that the Wall Street firm suddenly uncovered and heaped on its new parent.

Im sure a lot of analysts wanted Thain to stick around as he was presiding over the merger of the retail and institutional brokerage house with Americas largest bank. Thain, who previously reengineered the New York Stock Exchange, was being counted on to integrate the two organizations.

However, CNBC story is reporting that Thain spent $1.22 million redecorating his Merrill Lynch offices at a time when the firm was reeling from billions in losses from the credit crisis, and laying off thousands of employees. If its true, then I am extremely disappointed by his excessive spending decisions.

According to documents cited in the CNBC story, Thain spent $87,784 on an area rug, $25,713 on a mahogany pedestal table and $68,179 on a 19th century credenza, to name just a few of the items on the list. Also, Thain personally signed off on the items, according to CNBC. And he used an interior decorator, Michael S. Smith Design, that Michele Obama used and that the White House paid $100,000 for his services. (Even his driver earned $230,000, though that included $128,000 in over-time pay probably from all those midnight meetings at Treasury with Secretary Paulson and crew).

Given the state of the economy and the miserable state of affairs in banking and brokerage firms that are waiting for new infusions from the TARP funds or nationalization, I would have suggested going to an Estate sale or perhaps shopping at Staples or Office Depot. Then again, whats wrong with Kmart or Target?

Of course spending $1.22 million on revamping a senior executives office is a drop in the bucket compared to the $15.31 billion in losses that Merrill unexpectedly incurred in the fourth quarter of 2008 from mortgages and toxic debt still on its books. As a result, BofAs CEO Ken Lewis had to go to the government to tap another $20 billion to help it close the Merrill acquisition.

When Thain left the NYSE where he shook up the place and ushered in a new era of electronic trading, he came into Merrill Lynch after the ouster of Stan ONeal. It was Thains credentials as an M.I.T. graduate and technocrat, who was previously in charge of risk management at Goldman Sachs, that earned him high praise. Undoubtedly, Thain worked hard at Merrill Lynch to clean up the crisis that he walked into and Im sure he did many good things. So it is again surprising that he would waste money on redecorating his office in this climate.

On the other hand, in December, word leaked out that Thain was lobbying Merrills Board for a $10 million bonus payment. A letter from New York Attorney General Andrew Cuomo indicated he was against Wall Street executives receiving bonuses when their firms were failing and seeking government funds, reportedly led Thain to tell the Board he would forgo a bonus. Thain also accelerated the payment of bonuses to Merrill employees ahead of the Dec. 5 meeting when the BofA Board of Direcros would vote on approving the merger.

Perhaps it is time for CEOs in financial services with oversized compensation packages to get back to reality and reign in their expensive tastes. And when it comes to redecorating, they should consult pragmatic thinkers like Martha Stewart, for instance, who could whip up a more frugal budget.

 

http://www.advancedtrading.com/blog/archives/2009/01/john_thains_122.html?cid=nl_wallstreettech_daily>