James Gorman plans to step down as chief executive of Morgan Stanley within the next year after more than a decade at the top of the Wall Street bank he turned into a wealth management juggernaut.
Gorman, 64, told the bank’s annual shareholder meeting on Friday that 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”.
He added he expected to become executive chair “for a period of time” after handing over to his successor.
Gorman said Morgan Stanley’s board had “identified three very strong senior internal candidates for consideration as the next CEO”.
The leading candidates to take over one of Wall Street’s most-prized positions are co-presidents Ted Pick and Andy Saperstein, and Dan Simkowitz, head of the investment management unit, said people familiar with the matter. Pick runs Morgan Stanley’s institutional securities business, which houses investment banking and trading, while Saperstein oversees the wealth management division.
“Going for Andy Saperstein, that’s the higher multiple, more predictable business. Going for Ted Pick, that’s probably the more complex business,” said Chris Kotowski, an equity analyst at Oppenheimer.
Chief operating officer Jonathan Pruzan had been another leading contender to take over from Gorman but he departed earlier this year.
Morgan Stanley shares closed down more than 2 per cent on Friday.
Australian-born Gorman replaced John Mack as chief executive at the start of 2010, having been the bank’s co-president in charge of global wealth management, investment management and operations. He became chair in 2012.
His appointment 13 years ago underscored Morgan Stanley’s intention to expand in wealth management and diversify away from its legacy investment banking and trading businesses.
Gorman has doubled down on wealth and asset management with the acquisitions in recent years of ETrade and Eaton Vance.
The bank’s market capitalisation has tripled under his leadership to about $140bn, along the way overtaking arch-rival Goldman Sachs.
“He’s been a phenomenal CEO,” said Christian Bolu, banking analyst at Autonomous Research. “Where Morgan Stanley was, where they are now, a big chunk of that is his vision, the execution.”
However, his tenure has not been without blemish. The bank is being investigated by US authorities over its block trading business and this month said it was in talks about settling the case.
Gorman told shareholders at its investor meeting last year that he had no imminent plans to step down from the bank.
Along with Jamie Dimon at JPMorgan Chase and Brian Moynihan at Bank of America, Gorman is among a clutch of Wall Street bank chiefs who have bucked a broader trend of shorter executive tenures at US companies.
During the shareholder meeting, Gorman said Morgan Stanley was “very” insulated from the recent market struggles at several regional US banks.
“We play in the same neighbourhood but we fortunately have one of the best houses,” Gorman said. “I don’t think it has actually been a banking crisis . . . I think there’s a crisis among some banks.”