Morgan Stanley CEO plans to step down within the year, sparking Wall Street succession race


World Economic Forum/ Photo by: Remy Steinegger/Flickr/ CC BY-NC-SA 2.0

James Gorman said Friday he plans to resign as Morgan Stanley’s CEO within the year, setting off a succession race atop one of Wall Street’s dominant firms.

The bank’s board has narrowed its CEO search to three “very strong” internal candidates, Gorman told shareholders at the New York-based firm’s annual meeting.

Gorman, 64, will take on the executive chairman role “for a period of time” after stepping down as CEO, he said.

“The specific timing of the CEO transition has not been determined, but it is the board’s and my expectation that it will occur at some point in the next 12 months,” Gorman said.

“That is the current expectation in the absence of a major change in the external environment,” he added.

Since taking over in 2010, Gorman has pulled off one of the more successful transformations on Wall Street. Through a series of savvy acquisitions, Morgan Stanley rebounded after nearly capsizing during the 2008 financial crisis to become a wealth management juggernaut.

The bank began that journey in 2009, when Morgan Stanley purchased Smith Barney from Citigroup in the throes of the financial crisis, gaining thousands of financial advisors. It then spent more than $20 billion to acquire discount brokerage E-Trade and investment manager Eaton Vance in 2020, adding scale and heft to the bank’s nontrading operations.

As a result, Morgan Stanley has become an asset-gathering machine: Gorman has said his bank can add roughly $1 trillion in assets every three years, eventually getting to $10 trillion.

“It is hard to argue that James Gorman has not been one of the elite CEOs in the financial services industry, taking over the company coming out of the” 2008 financial crisis and sharply improving its returns, KBW analyst David Konrad said in a research note.

The firm’s investors have rewarded it with one of the top valuations among big bank peers. That’s because shareholders favor the steadier revenue streams generated by wealth and asset management over the more volatile fees from trading and advisory businesses.

Shares of Morgan Stanley have tripled during Gorman’s tenure.

Source: CNBC

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