Laurence D. Fink, founder of the $1.3 billion New York bond firm BlackRock (BLK ), was first on the podium at Merrill Lynch's (MER ) annual banking conference on Nov. 13. After talking about his success in avoiding the subprime mess, it was time for the Q&A. The first question was the one weighing most heavily on everyone's minds: "What is your firm doing about succession planning?"
Fink, who founded BlackRock in 1988 and turned it into the world's largest publicly traded asset manager, had surfaced as a key contender for two huge CEO posts on Wall Street: Merrill and Citigroup (C ). Both companies, hit hard by the subprime debacle, have written off billions and sent their CEOs packing. Given Fink's subprime success--BlackRock's earnings and share price have surged--he was seen as Mr. Fix-It.
Of the two jobs, Fink was thought to be a better fit at Merrill because of his close ties there. A 2006 deal rolled Merrill's money management unit into BlackRock. Merrill now owns a 49.8% stake, while BlackRock has doubled its assets under management, a partnership that's working well. A senior Wall Street executive knowledgeable about Merrill says, "from everything I've heard, [Merrill] wanted Fink."
But Fink was passed up. Instead the job went to New York Stock Exchange (NYX ) Chairman John A. Thain. Fink declined to comment, but two people close to him say the news was a complete jolt. Fink had met with the Merrill board the previous weekend and expected to get the nod. BlackRock planned to move President Robert S. Kapito into Fink's job, say insiders. Says a Merrill spokesman: "We think extremely highly of Larry and have considerable interest in his and BlackRock's future."
Now Fink must work side by side with Thain--an awkward situation if there ever was one.
By Mara Der Hovanesian