It has come to this.
John Thain has bid farewell to his herd, and tendered his resignation from Bank of Merrill Lynch of America. No – let’s be frank. Thain’s been ousted.
And what for? According to the WSJ, “a person familiar with the matter” said Bank of America (read: someone who knows exactly how Ken Lewis feels) had lost confidence in Thain:
Bank of America had lost confidence in Mr. Thain, this person said, after Mr. Lewis learned of mounting fourth-quarter losses at Merrill from the transition team handling the Bank of America-Merrill merger rather than from Mr. Thain himself. And when Mr. Lewis asked Mr. Thain what happened, the Bank of America CEO did not get a “good explanation for what was happening and why,” this person said.
The Bank of America CEO also concluded Mr. Thain has exercised “poor judgment” on a number of fronts. He left for a vacation in Vail, Colo., after the losses came to light, bonus payments at Merrill were accelerated so they could be collected before the end of the year and Mr. Thain had planned to fly this week to Davos, Switzerland, even though Bank of America had signaled that such a trip was not a good idea, this person said.
Of course, with a bit of due diligence, Lewis might not have needed Thain to tell him that the write-downs at Merrill would be er, significant.
In any event, tensions between the two men had been mounting for months, and this morning’s revelation by Charlie Gasparino that Thain had spent $1.2m redecorating his office may just have given Lewis an excuse another reason to show the former leader of the Thundering Herd the door.
Farewell, John Thain. It’s been emotional.
UPDATE 17:15 – Thain’s replacement will be Brian Moynihan, the current general counsel to Bank of America, according to this press release. Separately, S&P said that while Thain’s departure would not affect Bank of America’s rating, the agency was concerned about ‘integration risk’:
One concern with the Merrill acquisition is integration risk, especially because investment banking is highly relationship dependent. Today’s announcement, along with other senior level departures from Merrill, highlights this concern because the departures could challenge BofA in retaining Merrill management-level and rank-and-file employees. We will continue to monitor BofA’s success in integrating Merrill’s systems, people, and businesses.
Related links:
Shotgun marriage? – FT Alphaville
The Blundering Herd – Lex
The credible Mr Thain, redux – FT Alphaville