Merrill taps NYSE's Thain as CEO

NEW YORK (CNNMoney.com) -- Merrill Lynch & Co. said Wednesday that NYSE Euronext CEO John Thain will become the new chairman and chief executive at the nation's largest brokerage firm.

"I'm excited - it's a great opportunity for me," Thain said in a televised interview on CNBC.

Thain, 52, will take the helm at Merrill effective Dec. 1, the company said. He will fill the vacancy left by Stanley O'Neal, who resigned less than a month ago in the wake of Merrill's $8 billion loss on risky subprime mortgage investments.

Alberto Cribiore, who was named interim non-executive chairman at Merrill following O'Neal's resignation, said Thain was the "right person" for the job.

"John will be adept at balancing the focus on risk management and controls while taking the steps necessary to ensure the company evolves and grows," Cribiore said in a statement.

Wall Street seemed to echo Cribiore's sentiment as Merrill (Charts, Fortune 500) shares were up as much as 7 percent in Wednesday trade, following reports that Thain had accepted the position at Merrill. Shares of the firm finished 1.8 percent higher.

"I think he will be a really good leader for Merrill," said Ryan Lentell, an analyst at Morningstar, citing his efforts to implement big changes at the New York Stock Exchange and an impressive resume at Goldman Sachs (Charts, Fortune 500), where he served as both president and chief operating officer.

Separately, NYSE Euronext (Charts) said Duncan Niederauer will take over as its chief executive, confirming earlier reports of his appointment.

But taking the reins at Merrill will be a tall task for Thain, given the company's losses in the third quarter and that a number of financial services firms such as Bear Stearns (Charts, Fortune 500) and Bank of America (Charts, Fortune 500) have warned of further writedowns in recent days.

While he did acknowledge that Merrill still has some exposure to these risky mortgage securities, Thain said the company took a very conservative approach when it wrote down $8 billion because of its exposure to CDOs, or collateralized debt obligation, an investment vehicle that buys and sell bonds.

"In terms of what they did at the end of the quarter, I think they did a great job," Thain said in the interview.

Thain added that he did not plan to get out of the attractive CDO, mortgage or fixed income businesses when he took office, but warned that the market had not seen "the bottom" on many of these assets.

The other big challenge Thain could face is his lack of brokerage experience - an important deficiency given Merrill's position as the nation's largest brokerage.

As a result, said Lentell, Thain will most likely have to rely heavily on one of his top lieutenants, Bob McCann, who heads up Merrill's brokerage division and was also rumored to be a replacement for O'Neal.

The MIT-educated Thain, who also earned his MBA at Harvard, was among a stable of candidates rumored to be in the running for the top spot at Merrill, including BlackRock (Charts) Chief Executive Laurence Fink, who was widely considered to be the front runner for the job.

Merrill Lynch told CNNMoney.com Wednesday that Fink was never offered the CEO position.

Thain, who was also mentioned as a replacement for recently ousted Citigroup (Charts, Fortune 500) CEO Charles Prince, would not comment in the televised interview whether he had been offered the job at Citi.

Thain took the reins at the NYSE in January of 2004, when he spearheaded major changes, including taking the exchange public in 2006. Perhaps his biggest achievement was the landmark NYSE-Euronext deal, which gave the NYSE an international reach.