The executive shuffle at Merrill Lynch continues, with the firm replacing its investment banking head, as was widely rumoured.

Paul Roy and Arshad Zakaria are being promoted to take over Merrill’s investment banking division from Thomas Davis. Roy served most recently as head of Merrill Lynch’s global equity markets business. Zakaria headed corporate risk management, and before that headed the global corporate finance group within investment banking. Their successors will be announced shortly.

Roy and Zakaria succeed Davis as co-presidents of the Corporate & Institutional Client Group, with executive responsibility for the global investment banking, debt, equity and securities services divisions. Both will become executive vice presidents of Merrill Lynch and serve on the executive management committee.

Davis will become a vice chairman of Merrill and will lead an expanded private equity business, and he also will assume executive responsibility for the company’s Global Securities Research & Economics Group. Jerome Kenney, who has had executive responsibility for the research group, will assume additional responsibilities for senior client relationships around the world, and will continue to lead the corporate strategy function as an executive vice president of Merrill Lynch. He also continues as a member of the executive management committee.

“Tom Davis has been outstanding as head of our corporate and institutional business,” said David Komansky, chairman and chief executive officer, and Stan O’Neal, president and chief operating officer. “He was instrumental in creating what is truly a top-tier global franchise. The knowledge and client skills he brings to the private equity business will enable us to rapidly expand our presence in this important area. Given current market valuations, we see significant opportunities in private equity, and this appointment signals our determination to pursue those opportunities aggressively. Tom will also be a strong leader for our global research activities.”

“As co-heads of CICG, Paul Roy and Arshad Zakaria bring well-honed and complementary leadership skills to this important business,” Komansky and O’Neal added. “Paul, who will be based in London, has 27 years of experience in the global equity markets, with a deep knowledge of trading strategy and client relationships. Arshad brings a remarkable intellect to this position, along with a keen understanding of investment banking and the company’s risk and credit profile around the world.”

In addition to these changes, Merrill has also recently installed new leaders at the top of both its U.S. and international retail businesses. Describing these changes, Komansky and O’Neal said, “This is a team of highly talented, experienced and energetic leaders who will help chart our success for years to come. With these appointments, we are fine-tuning our organizational structure to adapt to a global business environment, which, while faced with near-term uncertainty, presents tremendous growth and leadership opportunities for Merrill Lynch.”