"I'm not sure a sprawling network of brokers is…any more difficult to manage than a sprawling network of investment bankers"
The appointment of NYSE Euronext (NYX) chief John Thain to replace Stan O'Neal as CEO of Merrill Lynch (MER) caught almost everyone on Wall Street by surprise. The scuttlebutt had been that Thain was headed for the top job at Citigroup (C) after the abrupt exit of Chuck Prince. Larry Fink, founder and boss of BlackRock (BLK)—which is partly owned by Merrill—was widely rumored to be O'Neal's replacement. But by the end of business on Nov. 14, Thain was set to sit atop Merrill. I caught up with him that day on CNBC and then again after his first visit to his new firm.
What is the Merrill board asking you to do, specifically?
The board is looking for leadership. The board is looking for strategy and direction. The board's looking to unify the company. And it's also looking to focus on some specific concerns—risk management and, of course, the fixed-income areas. And also to further develop the senior management team.
How long did it take you to go through the books at Merrill? Some people say it's worse than we know. How long was your due diligence?
Whoever is saying that, I don't know what access they had to the information, but I had complete access to Merrill's books for as long as I wanted. There was no issue at all with giving me as much information or as much time as I wanted.
Merrill owns 49% of BlackRock, which is run by Larry Fink. Will you work together or make changes to that ownership?
I look forward to working with Larry. He's done an unbelievably good job building BlackRock into one of the most successful financial management companies.
Was he approached for the CEO job at Merrill?
I had nothing to do with that, so I don't know. You have to talk to the board about that.
Were you approached to head Citigroup?
I did have conversations with Citigroup.
Was that not an attractive option for you?
No, that's not the way to characterize the question. I chose to move forward with Merrill because of the attractiveness of the opportunity there.
How would you characterize the culture of Merrill Lynch?
It's a little early for me to answer that question. I have to learn the culture. I need to spend time with the people. But what I would say from the people I've met so far—and I actually just came from Merrill Lynch, so I have a feeling—there is a strong culture there. They are very proud of Merrill Lynch, and that's a great opportunity to build on.
Do you think of Merrill as "Mother Merrill"?
Well, I don't know. I wouldn't have used that phrase. I think that phrase had a negative connotation in the past, and I don't think about it that way. I don't know if they think about it that way.
A couple of weeks ago, I interviewed Win Smith, who is a former top Merrill executive and the son of one of the founders of the firm. He said the thing he found most disturbing about Stan O'Neal was that Stan came in and just started cutting talented people with a wealth of experience.
This is a people business, and whether it's on the wealth management side or on the investment banking side or on the trading side, in the end the main asset is the people. And so making sure that you're paying attention to people, making sure that you're sensitive to the culture, making sure that the organization is working together as a team is critical to long-term success.
How would you change the wealth management business?
I'm not at all sure that I want to change it. I first have to learn about it. It is the leading wealth management franchise in the world. So I'm not sure it needs to be changed.