O'Neal stamps out politicking at Merrill Lynch

Arshad Zakaria, former head of global markets and investment banking, and Thomas Patrick, ex-vice-chairman, were two of the most high-profile victims of the boardroom row over whether Zakaria should have been appointed O'Neal's successor. Both have departed in the past fortnight.

An entire layer of Merrill's most senior executives has left since O'Neal became chief executive in December 2002. As well as Patrick and Zakaria, and former chairman David Komansky, those that have gone include John McKinley, Barry Friedberg, Ed Goldberg, Kelly Martin, Steve Hammerman, Bob McCann, Paul Roy and Michael Marks. Other top executives who have left since O'Neal has been in charge are Tom Davies, Win Smith and Jeff Peek.

Patrick and Zakaria were two of O'Neal's greatest supporters in the battle to replace Komansky, who retired last year, 12 months earlier than planned. However O'Neal is understood to consider Patrick's recent behaviour "insubordination", while Zakaria has spent the past few months telling everyone in the firm that he was to become president.

One insider said: "The place is in turmoil. At least 11 of the most senior people at the top of Merrill have now been forced out in one way or another. There are new people who are being appointed over and above more experienced bankers, and who know absolutely nothing about certain parts of the business."

Zakaria's departure came last week after Patrick apparently tried to force O'Neal to appoint him as president and heir apparent. O'Neal responded by demanding Patrick's immediate departure. A few days later he forced out Zakaria, who is to leave at the end of the year.

One of the reasons that O'Neal believes Zakaria was not up to the job was that he had no retail experience, a huge part of Merrill's business. While considered highly talented, Zakaria's decision to tell everyone his future was a shoe-in was deemed inappropriate.

Since then O'Neal has said publicly only that he is "sorry" to see Zakaria go. However, O'Neal said in an interview with Mark Constant, a Lehman Brothers' analyst, on the day Zakaria left: "Politics to the exclusion of merit will not be tolerated." Many Merrill staff are said to be reacting badly to the appointment of two of O'Neal's protégés, Greg Fleming, as co-head of the financial institutions group, and Dow Kim, head of global debt markets, who is also in charge of equities.

Merrill declined to comment.