Exit of Merrill exec could signal more changes

NEW YORK (Reuters) - Mac Gardner, a senior brokerage executive at Merrill Lynch & Co Inc MER.N, is leaving at the end of the month in what could be a prelude to more management changes within the company.

No reason was given for Gardner's departure in a letter sent by Merrill to employees. Merrill declined to comment about a replacement.

Gardner, 46, head of global wealth management Americas, was viewed within the company as a confidant of former Chief Executive Stan O'Neal, according to past and current executives.

Gardner's boss, Robert McCann, president of global wealth management, is expected to make changes within a business that's been insulated from the company's huge mortgage losses, company insiders said on Friday.

Meanwhile, investors are bracing for the January 17 release of Merrill's year-end results. Analysts expect huge mortgage losses to be unveiled, possibly eclipsing the $8.4 billion write-down recorded in the third quarter.

Analysts expect new Merrill Lynch CEO John Thain to scrub Merrill's balance sheet and continue to solidify his senior executive ranks.

One potential move could involve Thain making McCann a co-president with star Merrill investment banker Greg Fleming, who is currently co-president of the company, company insiders have said. Before Thain was named CEO, top Merrill brokers urged the board to give more power to McCann, according to a letter obtained by Reuters.

Thain has made it a point to praise the performance of the brokerage rank-and-file, which chafed under O'Neal's leadership, brokers have told Reuters. With nearly $2 billion in client assets, Merrill's brokerage and wealth management business is seen as a valuable franchise by investors.

But any promotion of McCann could squeeze out current co-President Ahmass Fakahany, who from March 2005 until May 2007 oversaw Merrill's market risk management. Analysts blame weak risk management for Merrill's problems with subprime mortgages.

Merrill declined to comment on Fakahany.

If McCann is elevated, that would trigger executive changes in the global wealth management division, company insiders have said.

Dan Sontag, responsible for the strategic management of 700 U.S. and Latin American branch offices, is an executive who could gain more responsibility in the wake of Gardner's departure, according to some company insiders.

McCann credited Gardner for helping the company reshape the brokerage business after the dot-com collapse. Gardner also played a key role in Merrill's recent acquisition of First Republic Bank. He joined the company in 1983 as an investment banking analyst.

"Mac has been a valued colleague and has made significant contributions to several areas of Merrill Lynch throughout his career," McCann said in a letter to employees.

Gardner's close relationship with O'Neal, however, added to the friction between O'Neal and McCann, company executives who know the men have said. Last year, a reorganization severed McCann's direct reporting relationship to O'Neal. At that time, Gardner was seen as an executive on the rise, possibly being groomed by O'Neal to replace McCann, company insiders have said.

But with O'Neal out of the picture, insiders told Reuters in November that Gardner's time at the company was numbered.

Merrill declined to comment on any prospective management moves. Gardner could not be reached for comment.

(Reporting by Tim McLaughlin, editing by Leslie Gevirtz and Carol Bishopric)