Tag Archives: Morgan Stanley

Morgan Stanley to reshuffle top posts

The incoming CEO of Morgan Stanley James Gorman is planning a reshuffling of the executive posts as he takes over the post currently handled by John Mack on January 1.  The changes will see Colm Kelleher and Paul Taubman run some of the bank’s largest divisions including sales,  trading and investment banking.

See the story on WSJ.

Earnings digest: Wells Fargo, Morgan Stanley, DB, Yahoo, and Boeing

I’m quite loaded so this is all I can atm.

Wells Fargo:

Wells Fargo& Co. posted $3.2 billion in third-quarter net income Wednesday on strong community-banking profits and mortgage banking investment gains, even as loan losses and heavily delinquent loans continued to rise quickly.

Wells Fargo increased its reserves by $1 billion during the quarter after it took permanent losses of $5.1 billion from defaulted loans.

The bank booked $3 billion in mortgage banking revenue, helped in part by high numbers of mortgage refinancing, through which Wells Fargo earns a fee for writing mortgages and selling them to government agencies.

Wells Fargo also posted $1.5 billion in one-time gains from investments tied to its mortgage servicing rights. Mortgage servicing rights fluctuate in value as interest rates change and banks often purchase hedging securities to offset swings and smooth earnings.

Morgan Stanley:

Morgan Stanley on Wednesday reported its first quarterly profit in a year, led by a rebound in income from underwriting debt and equity issues as well as an infusion of new revenues from its Morgan Stanley Smith Barney network of financial advisers.

The bank reported third-quarter earnings of $757m, a turnaround from a loss of $159m the previous quarter. Revenues jumped to $8.7bn in the quarter from $5.4bn the second quarter.

The US bank set aside $5bn for compensation expenses in the third quarter, up 28 per cent from $3.9bn in the second quarter. For the first nine months of 2009, Morgan Stanley has accrued $10.9bn in compensation, down 9 per cent from $12bn in the first nine months of 2008.

John Mack, Morgan Stanley’s chief executive, said in a statement: “Morgan Stanley continued to build momentum across our business this quarter.”

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$140bn in bank compensation: Ain’t too shabby

WSJ puts up a table on compensation for some of the biggest banks, hedge funds, asset managers, and stock and commodities exchanges.  The number: a record $140bn.  Yes, that’s higher than the $130bn that was paid when the market was at its peak back in 2007 and before everything came tumbling down.

Here’s the table:

WSJ09CompTable

Some things to note: Look at Blackstone’s compensation as a % of its projected revenue. Even the absolute number.  Wowzers.  And among the investment banks, it isn’t surprising that Goldman has the biggest in an absolute basis. Meanwhile Morgan Stanley also will be paying more than Citi and BofA would to its employees.

Then again, that’s just WSJ’s prediction.  Although higher or lower than that, I suppose it wouldn’t be so wrong for me to declare, let the compensation bashing begin.

Source: WSJ

Stephen Jen leaves Morgan Stanley for BlueGold

The only reason I decided to give significance to the departure of this man from Morgan Stanley is because I read him when I was working on my thesis in graduate school.  Working on the issues surrounding sovereign wealth funds, his studies and comments made a significant contribution to the output I’ve produced.

Jen, who studied under Nobel laureate Paul Krugman and the late economist Rudiger Dornbusch while pursuing a doctorate in economics at Massachusetts Institute of Technology, made his mark at Morgan Stanley with studies of big-picture issues ranging from global trade imbalances to the growth of sovereign wealth funds.

Some, like the “dollar-smile” theory he developed in 2001 which predicts gains for the greenback during times when the U.S. economy is either in a deep slump or growing strongly, and underperformance for the dollar during times of moderate growth ran against the grain and only gradually gained acceptance when the market validated his views. By the time he left Morgan Stanley, Jen’s distribution list had grown to 3,000 clients and market participants.

We say goodbye to Jen and good luck with the new job at hedge fund BlueGold Capital Management LLP.

Source: Bloomberg

Stuff for the weekend

Morgan ‘Nice Guy’ Needs To Develop Ties – FT

Post Lehman Performance By Various Assets – PragCap

High Levels of Liquidity fuel Equities Gain – FT

JP Morgan Still Very Bullish – PragCap

In Shift, Wall Street Goes to Washington – WaPo

Creating Quant Models That Are Closer to Reality – NYT

Tales from Lehman’s Crypt / Where the Players Landed– NYT

From Lehman’s Wreckage, New Lives – WSJ

You Can Start Up, But You Can Never Leave… Rwanda – Infectious Greed

Trolls Demanding Tolls – Economist

Myth of an Independent Blogosphere – Atlantic Business

Who is James Gorman?

Thanks to Deal Journal for most of these:

Age: 51

Home Town: Melbourne, Australia

Money Quote: “I have a direct way of speaking. What I do is tend to lay out everything; I tend to tell people what I’m going to do and how I’m going to do it and what is success for us and what’s not. ….without being too parochial about it, I think Aussies are more direct. I find, having been here for 22 years, in this culture directness is well received but not practiced very much. It might not be just cultural, it might be just me. I think Americans are very verbal and Aussies are more circumspect and that can come across as being clearer. It can also come across as abrupt and cold. Some people find me to be abrupt and cold. That’s just my personal style.”

Education: Bachelor of Arts and Law degree from the University of Melbourne and an M.B.A. from Columbia University.

Family: Gorman is one of 10 children, most of whom still live in Australia. Gorman has a young daughter and son, and his wife is American. “I certainly have no regret living in the U.S.,” he told an interviewer in 2007. “The quality of life in Australia is good but it is bloody good here as wel.”

First hired at Morgan Stanley: In 2006, to run its individual investor unit.

Job before Morgan Stanley: He was Merrill Lynch’s brokerage chief. He helped transform Merrill’s once-clubby brokerage unit into a more-sophisticated operation by focusing on a more-affluent client base. Prior to joining Merrill Lynch, he was a senior partner at consulting firm McKinsey & Co. from 1992 to 1999.

Toughest Job at Morgan Stanley: He is credited with the nearly impossible task of integrating Citigroup’s Smith Barney brokerage unit with Morgan Stanley’s brokerage operations. Morgan Stanley bought 51% of Smith Barney from Citigroup for $2.5 billion in Jan. 2009 giving it control of the world’s largest brokerage force of 22,000 advisers.

New York Charity Scene: He was a Director of Graham-Windham, a New York City nonprofit child-welfare agency and Co-Chairman of the Metropolitan Museum of Art’s Business Committee.

Other Board Seats: Trustee of Columbia Business School and of the Spence and St. Bernard’s private schools in New York City.

And from the official press release, his progression at Morgan Stanley:

James P. Gorman, 51, has served as Co-President of Morgan Stanley for the past two years – overseeing the Firm’s Global Wealth Management business; Investment Management business, including the Merchant Bank; and Operations and Technology group, among others. Mr. Gorman joined Morgan Stanley in February 2006 as the President and Chief Operating Officer of the Global Wealth Management Group. In October 2007, Mr. Gorman took on the additional role of Co-Head of Strategic Planning with Chief Financial Officer Colm Kelleher, and assumed the Co-President role in November 2007. In January 2009, Mr. Gorman was named Chairman of the Morgan Stanley Smith Barney joint venture, which closed in June.

Now you know.

Mack to step down as Morgan Stanley CEO

From the FT:

John Mack is to step down as chief executive of Morgan Stanley, putting an end to a four-year tenure marked by controversy over his strategic decisions and a near-death experience during last year’s financial crisis.

Mr Mack, who will stay on as chairman when he leaves the chief executive post in January, will be replaced by James Gorman, the bank’s co-president in charge of global wealth management, investment management and operations.

The appointment of Mr Gorman, who headed the private client business at Merrill Lynch before joining Morgan Stanley in 2006, underlines the growing importance of wealth management and the retail brokerage business to the future of Morgan Stanley.

This announcement came as a surprise to many.

Read the FT report.