Exit beckons for boss of troubled Bear Stearns

James "Jimmy" Cayne, the septuagenarian golf and bridge-playing head of Bear Stearns, could step down as early as today from the post of chief executive of the beleaguered investment bank but will stay on as chairman, according toWall Street sources.

Cayne, who was paid more than $38 million (£l9.2 million) last year, was notable for his absence at the start of the subprime crisis last summer. While Bear Stearns had to close two failed hedge funds and write down $1.9 billion, Cayne ousted his co-president and heir apparent Warren Spector and spent much of his time golfing and at a bridge tournament in Nashville, Tennessee.

His departure from the top slot would follow those of Charles "Chuck" Prince from Citigroup and Merrill Lynch's Stan O'Neal, both forced out in the wake of huge subprime writedowns.

Bear Stearns, known for its fixedincome work while most other investment banks tend to concentrate on dealmaking, had been planning massive expansion, particularly in London. A year ago, it agreed to take more than 200,000 square feet of a new office being built in Canary Wharf. The bank was reportedly looking to recruit up to 2000 new staff in London.

Cayne, 73, said he and his co-directors would not receive a bonus in 2007, but he last month sold shares worth $15.4 million. He still owns a 5% stake in the bank, whose shares fell 53% last year.

His successor will almost certainly be Alan Schwartz, 57, who joined Bear Stearns in 1976 after injury prevented him becoming a professional baseball player with the Cincinnati Reds.

He will take charge as the American economy moves into recession. David Rosenberg, chief US economist at Merrill Lynch, has said a wave of economic data, weakening employment and falling retail sales mean the US is already in recession. "This isn't even a forecast any more but a reality, he added.

Merrill chief executive John Thain is expected to recruit former Goldman Sachs head of securities Thomas Montag. Insiders said that Montag, who resigned from Goldman last month, will lead Merrill's global markets division, overseeing equity trading and the fixed-income unit.

Thain, himself an ex-Goldman president, inherited the helm of Merrill late last year after $8 billion of writedowns on mortgage-related assets.