NEW YORK, Might 19 (Reuters) – Morgan Stanley’s (MS.N) James Gorman plans to step down as chief govt inside a 12 months however keep on as govt chairman, drawing to an in depth 13 years within the function throughout which he constructed the Wall Road agency right into a wealth administration powerhouse.
Gorman, 64, instructed shareholders on Friday the financial institution’s board has recognized three robust candidates to succeed him, with out naming them.
Co-presidents Ted Decide and Andy Saperstein, and head of funding administration Dan Simkowitz, are broadly seen as contenders for the highest job.
“I undoubtedly don’t have any plans to exit like Logan Roy,” Gorman instructed shareholders in his trademark dry humor, referring to a personality in an HBO tv present through which the CEO dies with out having chosen a successor.
Whereas Gorman was typically requested about succession lately, the announcement on Friday was sudden and units up the ultimate stretch of a race amongst potential candidates. The three most frequently cited are white males, nevertheless, which might renew the controversy about range on Wall Road.
Gorman’s determination additionally places a highlight on a few of the different long-serving CEOs on the largest U.S. banks, similar to JPMorgan Chase & Co’s (JPM.N) Jamie Dimon and Financial institution of America Corp’s (BAC.N) Brian Moynihan.
Gorman stated that he’ll develop into govt chairman as soon as a brand new CEO is chosen, a board title seen as extra closely concerned within the firm’s affairs than non-executive director roles.
The function shocked some individuals internally, one senior Morgan Stanley banker stated. One other Morgan Stanley supply stated the title was to point continuity. Gorman’s predecessor John Mack stayed on for 2 years as chairman when the Australian-born govt took over as CEO.
Defending the financial institution’s document on range, the supply stated Morgan Stanley has a feminine chief monetary officer, who’s youthful than the executives seen as potential successors. The manager committee can be extra various, with girls and other people of coloration represented, the supply stated.
Some analysts praised Gorman’s tenure at Morgan Stanley however stated though the succession is more likely to be orderly, traders could also be dissatisfied.
Veteran financial institution analyst Dick Bove stated Gorman’s retirement is a blow to the corporate. “The failure to announce a successor will tear the corporate aside if it’s not executed rapidly,” Bove, a financial institution analyst at Odeon, wrote in a notice.
Morgan Stanley shares had been down 2.2% in afternoon buying and selling.
TRANSFORMING MORGAN STANLEY
Gorman has refocused the Wall Road agency right into a extra diversified firm that’s much less reliant on what have been its conventional strengths — buying and selling and funding banking — since being appointed CEO in 2010. The much less unstable enterprise of wealth administration accounted for 45% of agency’s income within the first quarter.
The diversification helped the financial institution’s share worth take a lead over its closest rival, Goldman Sachs Group Inc (GS.N), which determined to largely keep on with its knitting popping out of the monetary disaster of 2008.
“Constructing out their wealth administration division has been an actual boon to the corporate, they usually bested Goldman in that follow,” stated Kim Forrest, chief funding officer of Bokeh Capital Companions.
Gorman struck main offers together with the acquisitions of cash supervisor Eaton Vance, on-line dealer E*Commerce, and stock-plan supervisor Solium Capital.
He was additionally the important thing architect behind Morgan Stanley’s buy of Smith Barney, a brokerage and funding adviser that turned a cornerstone of the financial institution’s wealth administration arm.
Gorman “has executed a masterful job of reworking Morgan Stanley into the mannequin that almost all main banks need to be, with a give attention to asset administration, monetary advisers,” stated Artwork Hogan, chief market strategist at B Riley Wealth in Boston.
Nonetheless, it has not all been plain crusing for Gorman.
The financial institution earlier this month stated it is in talks to resolve a greater than year-long investigation by U.S. regulators into its block buying and selling practices.
Reuters has reported that the U.S. Securities and Change Fee has been probing whether or not monetary executives could have damaged the principles by tipping off hedge funds forward of enormous gross sales of shares that the financial institution has managed.
The lender was additionally caught up in business probes by the SEC into worker communications on messaging platforms that had not been authorized by the corporate, which resulted in a $200 million effective.
POTENTIAL SUCCESSORS
The announcement set off hypothesis on Wall Road about who among the many potential successors was the most certainly to get the job.
Mike Mayo, banking analyst at Wells Fargo, famous that Saperstein, 56, may very well be the “main candidate given the expansion of wealth, improve in shopper belongings.”
KBW analyst David Konrad stated whereas Saperstein runs “essentially the most distinguished enterprise,” Decide, 54, co-president and head of the institutional securities group, could also be a “barely extra possible selection” as a result of he was “instrumental in turning round” the financial institution’s fixed-income, currencies and commodities enterprise.
Simkowitz, the oldest of the three at 58, is head of funding administration at Morgan Stanley and co-head of the agency’s technique and execution.
Reporting by Tatiana Bautzer; Modifying by Toby Chopra
Our Requirements: The Thomson Reuters Belief Ideas.
