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Business lender CIT Group said Monday it would prepay 750 million dollars on its 7.5 billion dollars in debt, marking a step toward recovery under the new leadership of Wall Street heavyweight John Thain.

Thain, a former head of Wall Street investment bank Merrill Lynch, on Monday took the reins earlier in the day as chief executive and chairman of CIT, a major business lender that recently emerged from bankruptcy.

CIT said its board of directors had "authorized the voluntary prepayment of 750 million dollars on its 7.5-billion-dollar first lien credit facility."

The New York-based bank holding company said it would prepay "this high-cost debt" on Tuesday out of its more than five billion dollars in available cash.

The repayment is subject to a two percent payment premium.

Thain, 54, replaced Peter Tobin, the interim CEO, as the lender continues to streamline its operations focused on serving the small-business and middle-market sectors, the company said in a statement.

"John is a well-respected financial services executive and proven leader who is uniquely qualified to lead CIT at this critical stage," said board member Vice Admiral John Ryan.

Shares in CIT closed 0.46 percent lower at 30.61 on Wall Street, despite an overall market slump driven by sovereign debt worries in the eurozone that left the Dow blue-chip industrials down 1.04 percent.

Thain, who resigned from loss-ridden Merrill 13 months ago just after its acquisition by Bank of America, had negotiated the BofA acquisition as the financial crisis accelerated following the collapse of Lehman Brothers in September 2008.

He was kept on BofA's executive team but resigned shortly after the merger closed on January 1, 2009, under a cloud of controversy over hefty bonuses he had paid to Merrill employees despite the firm's heavy losses.

Thain remains a pivotal figure in the inquiry into bonuses paid at Merrill before its takeover and disclosures to shareholders and the government.

Merrill had tapped Thain as CEO and chairman in November 2007.

At the time, Thain headed NYSE Euronext, the world's largest stock market operator whose creation he had piloted from the merger of the New York Stock Exchange and European rival Euronext.

Prior to Merrill, Thain had a long career at Wall Street investment titan Goldman Sachs.

"I am pleased to have the opportunity to lead the newly reorganized CIT," Thain said in the CIT statement. "The company's numerous market-leading positions are evidence of the resiliency of the franchise and its unwavering commitment to its customers."

CIT exited Chapter 11 bankruptcy reorganization on December 10, six weeks after filing for bankruptcy when a comprehensive debt-exchange plan failed.

The commercial lender had received a US government bailout of about 2.3 billion dollars in 2008 at the height of the financial crisis, but officials refused further aid last July when the company's woes deepened.

In its voluntary Chapter 11 filing on November 1, CIT reported total assets of 71 billion dollars and liabilities of nearly 65 billion, making the bankruptcy the fifth largest in US history, behind Lehman Brothers, Washington Mutual, WorldCom and General Motors.

AFP