Why Have One Morgan Stanley When You Can Have Two?

Author:
Publish date:
Updated on

Morgan Stanley hopes very much that it is more than the sum of its (two) parts, especially as one of those parts is basically subtracting.

Answering questions at a presentation on Tuesday, James P. Gorman, the bank’s chief executive, encouraged investors to think of Morgan Stanley as “two integrated firms.”

On one side is the wealth management business, which generates at least 40 percent of the bank’s revenues. On the other is the securities business, which includes trading, Wall Street’s golden goose that has laid fewer eggs since the financial crisis….

Mr. Gorman said that he expected wealth management to continue growing and that, eventually, its return on equity — a measure of profitability — would be “well north” of 10 percent. The cost of capital for most big firms is generally understood to be about 10 percent, and Morgan Stanley has generated well below that since the financial crisis.

But shrunken fixed-income revenues may make it a little harder to nudge securities above 10 percent, Mr. Gorman warned.

Morgan Stanley Sees Itself as Two Firms in One [DealBook]

Related

Morgan Stanley’s Gorman: What Investigation?

James Gorman, aka “Jimmy G,” is sick and tired of all these reporters suggesting his firm is under some kind of investigation by the Feds. Just because Goldman has been charged by the SEC, doesn’t mean Morgan Stanley, which lost a lot more money than GS during the crisis, also bet against its own shitty CDO deals. All the noise surely points to a conspiracy of short-sellers. We know who you are. Now go back to watching Miss USA pole dancing.

Morgan Stanley Has Canned Enough Employees At This Point

Great news for anyone who's been sitting nervously at their desk at Morgan Stanley the last few days, wondering whether or not their boss was about to tap them on the shoulder to go have a chat with HR: if you've made it this long, you're safe! There will be no more human layoffs for the foreseeable future (plants may still be at risk).

Layoffs Watch '12? Morgan Stanley?

James Gorman is approaching cost-cutting with the same focus as the Zodiac killer, so maybe. Morgan Stanley is "maniacally focused" on cutting costs apart from compensation and is on track to reduce expenses by $500 million this year, Chief Executive James Gorman said on Tuesday. Gorman, speaking at a conference in New York, also reiterated Morgan Stanley's plans to reduce costs by $1.4 billion annually over the long term...The bank is also monitoring the size of its overall payroll for possible job cuts as revenue remains under pressure from a weak market environment, he said. "We are very, very focused on that, obviously, in this environment," said Gorman. Morgan Stanley "maniacally" focused on cost cuts-CEO [Reuters] Very much related: Morgan Stanley Joins Goldman Sachs In Herbicide