Internet killed the Wall Street star
“At this point in my life and career I realize that this is an opportune time to make a change.” So said Herb Allison as he resigned from Merrill last month. No-one believed it. Nor were they meant to.
It may be no more than a coincidence that Allison, who had been at the bank for 28 years and who as president and chief operating officer was the heir apparent to CEO David Komansky, quit just as Euromoney‘s analysis of the tumultuous year at the US investment bank hit the stands. But his demise is directly linked with Merrill’s disastrous losses in fixed-income last year. He was the one who oversaw Merrill’s response, cutting nearly 20% of the workforce in the fixed-income division.
Morale was low. “We knew there were problems with the structure of the division,” says one former Merrill employee. “But when the shit finally hit the fan, executives overreacted, ran for the hills, and left us carrying the can. It left a very bitter taste in the mouth.”
Allison was not a traditional Merrill man. He is a philosophy graduate from Yale and unlike many executives, he was not blooded in the broking side of the business. He was more of a bean counter, having worked in marketing, planning and as treasurer of the bank in the early 1980s. He was head of human resources in the mid-1980s and then head of administration and CFO in the early 1990s.
Only in 1993 did he take on a role in a profit area, as head of investment banking, then as head of the overall institutional business which Merrill calls corporate and institutional client group. His elevation to president and COO came in 1995.
While the going was good, Allison’s background rarely mattered to others. But once his name became linked to what many see as Merrill’s overreaction to last year’s crises, it became a factor.
Rumour was that he also had arguments about internet strategy with John Steffens, Merrill’s head of retail broking and that he had created ill feeling with a former executive now acting as a consultant by trying to cut his pay. Then former CEO Dan Tully, who had supported Allison’s promotion in 1995, began to suggest that other executives did not have confidence in Allison’s ability to lead the troops once Komansky retires in about five years’ time. So why stay longer if nobody wants you?
A palace coup. But in traditional Merrill fashion, it is not a coup at all. And no-one is to blame. Antony Currie
