Irish man Colm Kelleher named president of Morgan Stanley

Irish man Colm Kelleher has been promoted to president of global financial services giant Morgan Stanley, placing him in pole position to replace current chief executive James Gorman when he steps down.

Mr Kelleher (58), who comes from Cork, joined the firm in 1989 and until Wednesday, served as its investment banking chief. His promotion prompted the departure of the group's head of wealth management Greg Fleming, who was previously seen as a likely successor to Mr Gorman.

Mr Fleming, who is seen by Wall Street power brokers as chief executive material and ambitious to lead a major company, declined Morgan Stanley's offer to stay on and told the firm this week he was leaving, a source said. Mr Fleming served as president and chief operating officer at Merrill Lynch from June 2007 to early 2009.

In addition to becoming president, Mr Kelleher will take on Mr Fleming’s responsibilities overseeing wealth management. His elevation to president makes him the second most powerful executive at Morgan Stanley and the obvious successor to Mr Gorman, who is nearly six years into a turnaround plan.

However, Mr Gorman (57) is not seen as being in a hurry to leave, and because they are close in age, there is no guarantee that Mr Kelleher will eventually replace him.

Trading Veteran

A trading veteran known for his sarcastic sense of humour, Mr Kelleher was Morgan Stanley's chief financial officer during the 2007-09 financial crisis and helped shrink the bank's balance sheet from $1 trillion in 2007 to $659 billion in 2008. "He achieved one of the most miraculous shrinkages of a company that I've ever seen ever," Rafferty Capital Markets analyst Dick Bove said.

Mr Kelleher is currently overseeing a retrenchment of Morgan Stanley's fixed-income trading business, with 1,200 jobs set to be axed worldwide. Morgan Stanley's bond trading revenue slid 42 per cent during the third quarter, in one of the bank's worst performances since the financial crisis. Shares of Morgan Stanley have fallen over 21 per cent in the last 12 months, compared with a decrease of 12 per cent from arch rival Goldman Sachs Group.

Mr Bove said Mr Kelleher’s appointment was about creating a balance of power at Morgan Stanley between wealth management, where Mr Gorman’s expertise lies, and the securities unit overseen by Mr Kelleher.

“Why would you have two wealth management guys running the company? If you do that, you’re signalling to anyone who doesn’t work in wealth management that they have no future at Morgan Stanley,” he said.

It is the second time Mr Kelleher, a 27-year veteran of the bank, has won out in internal power struggles. In 2012, Paul Taubman, one of Morgan Stanley's top dealmakers, left the bank after Mr Kelleher was named as sole head of sales and trading, a division they had run jointly. While a native of Bandon, Cork, Mr Kelleher spent a large part of his youth in England and currently splits his time between London and New York.

Mr Kelleher’s basic salary grew sevenfold to $6.8 million in 2014, the third highest at any US-based public company. His overall compensation package was valued at $19.2 million.

The Cork man will be back in Ireland shortly as he is among the confirmed speakers for the inaugural “Building the Future of European Financial Services’ event, which is organised by the IDA in association with the Financial Times. The one-day event, which is expected to attract between 300 and 400 delegates, will be held at Dublin Castle on Wednesday, January 27th.

Additional reporting: agencies