He masks his cutting edge well.īut a kid who was born on a cotton farm doesn’t become the 11th CEO of one of Wall Street’s finest without an edge.
CHRIS FINK FIFTH THIRD BANK FULL
Meet O’Neal and you can’t help but be impressed with his politeness and easy charm, and his determination not to deal in glib soundbites but to give a full and considered response. "Because we'd been so successful doing a number of things, we came to believe that if we just did more things in more places, that we would continue to be equally successful without necessarily thinking about what was required in order to make it a reality, or adequately testing the assumptions that underlie the business thesis" - Stan O'Neal They’d forgotten about his years as a ruthless and aggressive dealmaker – the real O’Neal to this day. People had focused too much on his two years as CFO. For a long-time O’Neal was seen a stop-gap, as a cost-cutter who would go once the cull was over. Not much doubt who is in charge then, is there?īut that wasn’t always the case. Look at his title – chairman, chief executive officer, and president. In addition, O’Neal had to take complete control of the business. In total, some $7.5 billion of annual costs were removed from the business. Mother Merrill had become over-generous to her brood: the days of chauffeured cars for middle managers, concierge services for investment bankers and lavish expenses had to go too. And it wasn’t just a question of cutting staff numbers. We needed to chop one off.”Īnd that’s exactly what Merrill did, removing 33% of its workforce in a dramatic cull of 25,000 employees. We had too many support people and needed to employ a new discipline around resource allocation. “We were, in some cases, feeding businesses with low margins and lower prospects.
“The facts and figures didn’t lie,” says vice-chairman and chief administrative officer Ahmass Fakahany. Merrill Lynch’s senior managers pinpointed a number of areas that needed to undergo fundamental change. In effect, the thundering herd was clapped out. “Because we’d been so successful doing a number of things, we came to believe that if we just did more things in more places, that we would continue to be equally successful without necessarily thinking about what was required in order to make it a reality, or adequately testing the assumptions that underlie the business thesis.” “Success is often the route of hubris and maybe indulgence in many respects it’s loss of discipline on many fronts,” says O’Neal. At the turn of the millennium about 75% of Merrill’s bottom line came from equity-related business. People familiar with management strategy at the time say there was a disproportionate reaction to bad news as all the good news was in equities, resources were allocated accordingly. It was out of the commodities business, out of private equity, losing money in fixed income, little or nowhere in mortgages and stop/start in foreign exchange. The Merrill Lynch of 2006 is a very different investment bank to its former incarnation, the legacy of a previous regime that had allowed the firm’s excesses to spiral out of control.īy 2000 and the height of the tech bubble, Merrill Lynch had gone from being a profitable diversified investment bank to pretty much a one-trick pony. Debt revenues soared to $2.1 billion in Q1 2006 alone. In the first quarter of 2003, GMI revenues were little more than $2.5 billion. Revenues in global markets and investment banking (GMI) were $4.55 billion, up 37% from the previous year. Revenues in the first quarter of 2006 totalled $7.96 billion – a 28% increase that outstripped most of its rivals, higher than even in the halcyon days of 2000 when the S&P 500 hit its peak and Merrill was almost a pure equities firm. The numbers don’t lie, and here’s some headline evidence of the O’Neal effect. Without him, Merrill’s businesses would have survived – only we’d be owned by someone else now.” O’Neal, in person, insists on sharing much of the credit with his tightly knit executive committee, which numbers just eight people.īut here’s the take of a very senior member of Merrill’s management group: “When Stan O’Neal took over the firm, he was the only person for the job. Much of the credit for the turnround has to go to O’Neal himself, who became president of the firm in its darkest days in 2001. At the very least, such speculation might nail once and for all the patently undeserved reputation heaped on O’Neal during his early years at the Merrill helm – that he was merely a cost-cutter, and not the man to take Merrill forward.
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