The sudden exit of Stanley E O'Neal, the CEO of Merrill Lynch, gives further reasons to worry that the US subprime crisis may have some more high-profile victims.

Merrill Lynch becomes another investment bank to face the heat from the subprime crisis that surfaced in June this year, engulfing the US mortgage market, whose reverberations are now being felt across the global economy. The high-profile investment bank reported on October 24 this year, a record net loss of $2.3 bn for the third quarter ending September 2007; on the back of huge write-downs of $7.9 bn across Collateralized Debt Obligations (CDOs) and subprime mortgages, its biggest since it was set up 93 years ago. "Mortgage and leveraged finance-related write-downs in our FICC business depressed our financial performance for the quarter.

In the light of difficult credit markets and additional analysis by management during our quarter-end closing process, we reexamined our remaining CDO positions with more conservative assumptions. The result is a larger write-down of these assets than initially anticipated", said Stan O'Neal, who holds the dual post of Chairman and CEO at the New York-headquartered firm. According to several media reports, the massive write-off, which is equivalent to 13% of Merrill's m-cap, exceeded its net earnings for all of 2006 and equaled 42% of gross revenue in the first nine months of 2007. Worse, s predict further write-down of another $4 bn in the fourth quarter. The Merrill's board has been amazingly quick in responding to the crisis as O'Neal was shown the door in less than a week's time after the third-quarter results were declared.

Global CEO Magazine, US Subprime Crisis, Stanley E O'Neal, Merrill Lynch, Mortgage Markets, Collateralized Debt Obligations, CDOs, Subprime Mortgages, Union Bank of Switzerland, UBS, Mortgage-Backed Securities, MBS, Subprime Mortgage Markets, "O'Neal's Management Style.