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Saturday, May 18, 2024

Bank Veteran Ted Pick Named as Morgan Stanley’s Next CEO

Morgan Stanley, one of Wall Street’s renowned banks, announced on Wednesday that Ted Pick, a three-decade veteran of the firm, will be its next chief executive, concluding an unusually public three-way competition that James Gorman, the chief executive since 2010, had once humorously likened to the television series “Succession.”

Mr. Pick will assume his new role in January. His competitors for the position, Andy Saperstein and Dan Simkowitz, will take on more substantial roles as co-presidents, overseeing Morgan Stanley’s wealth management and sales and trading businesses, among other areas.

Mr. Gorman, aged 65, expressed hope that Mr. Saperstein and Mr. Simkowitz would stay on for the long term. However, the bank did not make either of them available for interviews.

Gorman stated, “We were fortunate to have three truly talented internal candidates.” He mentioned that “everyone had told me this would lead to some major internal disputes, but that didn’t happen.” The bank had publicly disclosed these internal candidates, a departure from the usually secretive process favored by many of Corporate America for top positions.

Mr. Pick, aged 54, joined Morgan Stanley in 1990 and ascended through the ranks in its investment banking and trading divisions, most recently serving as co-president overseeing those units. In an interview, he revealed that he had not learned of his appointment as chief executive until around 4:30 p.m. on Wednesday when the bank’s board of directors called him to a meeting and welcomed him with a standing ovation.

He is poised to inherit a vastly different bank from the one that Mr. Gorman assumed control of after the 2008 financial crisis. Morgan Stanley’s significant wagers on subprime loans soured during the mortgage collapse, causing substantial losses and compelling the bank, like many of its peers, to seek outside investors and request a government bailout.

Even before the financial crisis, Morgan Stanley had been the stage for a great deal of Wall Street drama. In 2005, John J. Mack, a longtime leader of the bank who had left to assume the top position at Credit Suisse, made a boardroom comeback, ousting Philip J. Purcell as chief executive. This power struggle was documented in “Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley” by the journalist Patricia Beard.

However, just four years later, Mr. Mack announced that he would step down as chief executive following a tumultuous period that featured both soaring profits and losses, leaving the publicly traded bank’s stock price in turmoil. Mr. Gorman steered the bank to stability by concentrating on the expansion of its brokerage business, including the Smith Barney franchise that it acquired in 2009, catering to wealthy individuals. Major acquisitions in wealth management, such as the $13 billion acquisition of E-Trade in 2020, further fortified Morgan Stanley’s business, reducing its reliance on banking and trading divisions, which can be more volatile.

The bank also serves “blue blood” clients such as Elon Musk. With a robust technology banking practice, Morgan Stanley played a pivotal role in Mr. Musk’s acquisition of Twitter last year, now known as X. The bank was one of the lenders who extended a loan to Mr. Musk to facilitate the transaction, a decision that may result in losses given the social media platform’s difficulties.

In recent years, Morgan Stanley has maintained a lower profile than many of its counterparts, at least when compared to the commotion at its downtown rival, Goldman Sachs. David M. Solomon, the chief executive of Goldman, has been striving to refocus the business on its traditional core areas after an unsuccessful foray into consumer banking, even as rumors swirl regarding the duration of his tenure.

Morgan Stanley has encountered some obstacles lately. In its most recent quarterly earnings report last week, investment banking revenue tumbled, wealth management inflows decelerated, and profits were down by almost 10 percent compared to the prior year.

The bank’s stock has fallen by 17 percent this year. The shares exhibited little change in after-hours trading following the announcement of Mr. Pick’s appointment.

Neither Mr. Gorman nor Mr. Pick were concerned about the stock’s decline. Both emphasized that Mr. Pick’s selection should not be interpreted as an indication of the bank’s preference for any specific business segment.

One thing that has changed, according to Mr. Pick, is his language. In 2017, The Wall Street Journal reported that his proclivity for profanity had drawn the attention of Morgan Stanley’s top brass.

When asked about his current practices, Mr. Pick mentioned that he had adopted “the King’s English” and had a fondness for the entire lexicon. He added, “There’s a wide range of vocabulary to explore beyond the four-letter words.”

David Faber
David Faber
I am a Business Journalist of The National Era
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