Zakaria to Leave Merrill This Year
Merrill Lynch & Co. said Wednesday that its global markets and investment banking chief, Arshad Zakaria, would leave the firm at the end of the year, eight days after his staunch supporter for a wider role at the Wall Street firm was ousted.
Zakaria, who became head of Merrill’s global markets and investment banking unit about six months ago, was widely expected to leave the firm after the forced departure of Executive Vice Chairman Thomas H. Patrick on July 29.
Patrick’s sudden departure came after he lobbied for Zakaria to be named Merrill’s president against Chief Executive E. Stanley O’Neal’s wishes.
Merrill named Gregory J. Fleming, co-head of its financial institutions banking group, and Dow Kim, head of global debt markets, as co-heads of global markets and investment banking.
Zakaria, 42, will assume a new role as chairman of the unit until he leaves, Merrill said.
“It doesn’t look clean,” said Thomas Giles, chief investment officer at Dean Investment Associates, which oversees about $600 million but does not own Merrill stock. “It always looks bad when you have these rather unceremonious departures.”
If Zakaria had been named president, a post O’Neal holds, he would have been next in line as CEO. But O’Neal did not want an extra layer between himself and the heads of Merrill’s three main divisions, according to a person familiar with the matter. Undeterred, Patrick advocated naming Zakaria as president at a board meeting late last month.
“O’Neal told Patrick ‘no’ when he pressed for Arshad’s promotion, and when the boss says ‘no,’ it means ‘no,’ ” a person at the firm said when Patrick was let go.
Zakaria, a protege of Patrick’s, was put in a difficult position when O’Neal forced Patrick to leave Merrill. Zakaria and Patrick are known to be close friends and once worked together on sophisticated tax shelters for corporate clients.
Zakaria, also a member of Merrill’s operating committee, is a Harvard-trained math whiz who joined Merrill’s investment banking unit in 1987. He was named managing director in 1991; from May 2000 to October 2001, he served as head of corporate risk management.
“I am sorry to see him go but pleased that he will be available to Greg, Dow and myself in ensuring the smoothest possible transition,” O’Neal said in a statement.
Zakaria’s division helped power Merrill to its second-best quarter ever last month, accounting for 55% of the New York-based company’s $5.3 billion in revenue.
As co-heads, Fleming, 40, will be responsible for all origination activities, including global investment banking, and Kim, also 40, will be responsible for the global debt and equity businesses, Merrill said.
Shares of Merrill Lynch closed down a penny at $51.25 on the New York Stock Exchange. The stock hit a 52-week closing high of $54.37 on July 31.
