MORE blood was spilt on the boardroom carpet at Merrill Lynch last night as the Wall Street bank announced the retirement of Arshad Zakaria, the head of its global investment banking arm, after just six months in the job.
Although he has agreed to stay on until the end of the year, Mr Zakaria’s departure is widely viewed on Wall Street as a result of his failed bid to weaken Stan O’Neal’s position as joint president and chief executive, and become president of the company.
Mr O’Neal, who is only three months into the job, has refused to appoint a separate president and a chief operating officer, as Mr Zakaria and his supporters had demanded.
The Merrill chief executive tried to put the matter to rest at a recent “town meeting” when he told the assembled workforce that he wants to stay “close to the business”.
The succession battle deeply divided the bank’s upper echelons and exposed a group of executives who were intent on diluting Mr O’Neal’s power base. But now, their apparent leaders have gone.
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“You have to be able to trust your senior employees,” a Merrill source said. “One person is the boss, no one else.”
Thomas Patrick, the former executive vice-chairman of Merrill Lynch, was forced out of the bank last week when rumours about the fierce and bitter succession battle emerged.
He championed 42-year-old Mr Zakaria — a friend and golf partner — as a pretender to the Merrill throne against Mr O’Neal’s explicit wishes.
Mr Zakaria is said to have told colleagues in recent months that he expected to win the presidential role, despite Mr O’Neal’s opposition.
Mr O’Neal was incensed by the assumption, it is understood, and instructed Ahmass Fakahany, the chief financial officer, to tell Mr Zakaria he would never be named president.
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But at a board meeting last week Mr Patrick challenged Mr O’Neal and moved again to promote Mr Zakaria’s cause. The move prompted Mr O’Neal to call an emergency session of the executive committee. With the board’s approval he then asked Mr Patrick to resign or to face being fired.
Merrill insiders say Mr Patrick was escorted from the building by security guards shortly afterwards.
There were also rumours that Mr Patrick had paid a TV producer $75,000 to make a documentary to undermine Eliot Spitzer, the New York attorney-general, as part of a strategy to derail the investigation into biased investment analysis on Wall Street.
The bank has since concluded an investigation that found no evidence of any improper payments authorised by Mr Patrick, while Mr Spitzer’s office said the matter is closed.