Morgan Stanley elevates potential successor to CEO

Morgan Stanley has streamlined its line of succession for chief executive James Gorman, following Wall Street rivals Goldman Sachs and JPMorgan Chase in preparing its next generation of leaders.

Ted Pick (49) solidified his status as an heir apparent with his promotion to run the bank's trading and investment banking business on Tuesday, taking charge of 9,000 people. Franck Petitgas was also named head of the bank's operations outside the United States.

Mr Gorman, who turns 60 at the weekend, is unlikely to leave soon. Were that to happen, said people familiar with the bank’s inner working, president Colm Kelleher is seen as the most likely immediate successor.

But by elevating two of its most senior executives, Morgan Stanley has made its longer-term succession planning more apparent. “There’s no doubt that Ted is being groomed to take on more responsibilities,” said one person who is familiar with Morgan Stanley’s strategy. “Obviously it’s not guaranteed, but the logical next step is for him to become CEO.”

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Mr Pick, a former sales and trading head, is credited with reviving the fortunes of Morgan Stanley’s trading operations after the financial crisis.

Vacant

He focused on turning round a fixed-income business, cutting about one-quarter of traders, combining sales teams with equities and shaking up incentive pay. He also reduced some lines of business such as commodities and foreign exchange.

Mr Pick is filling a position that has been essentially vacant since the elevation of Mr Kelleher to president at the start of 2016.

Pressure on Morgan Stanley to clarify its line of succession comes after recent moves by JPMorgan Chase and Goldman Sachs, Morgan Stanley’s closest rivals on Wall Street.

In January, JPMorgan created the new positions of co-president and co-chief operating officer for Gordon Smith and Daniel Pinto, heads of the retail and investment-banking divisions, while announcing that Jamie Dimon would stay on for about another five years as chairman and chief executive.

Goldman, meanwhile, followed the 2016 departure of president Gary Cohn by replacing him with finance chief Harvey Schwartz and David Solomon, former head of investment banking.

Mr Schwartz left the bank in April, leaving Mr Solomon as the clear favourite to succeed Lloyd Blankfein, who has sat atop the bank since 2006.

Top role

One person familiar with Morgan Stanley’s operations likened Mr Kelleher’s position to that of Mr Cohn. Like Mr Cohn, Mr Kelleher is roughly the same age as a chief executive who shows few signs of leaving soon.

Mr Cohn was long believed to be in line to take over the top role from Mr Blankfein, but ultimately left to become President Donald Trump’s chief economic adviser after it became clear that the longtime Goldman boss had no immediate plans to move on.

“Colm is in the same situation as Gary was at Goldman,” said the person close to Morgan Stanley. “Once you know that the guy above you isn’t moving any time soon, there’s a risk you’ll be too old by the time they need to appoint a new CEO. That’s why Ted is better placed to take over in the future.”

Among the other changes announced in an internal memo on Tuesday, Susie Huang becomes co-head of investment banking - the first woman to hold the position at Morgan Stanley – alongside Mark Eichorn.

– Copyright The Financial Times Limited 2018