[NEW YORK] Morgan Stanley on Wednesday promoted its investment banking chief, Colm Kelleher, to president, making him the heir apparent to current Chief Executive James Gorman, and prompting Greg Fleming, the head of wealth management, to depart.
Mr Fleming, who was once seen as a likely successor to Mr Gorman before losing out in a management reshuffle in October, on Wednesday emailed the bank's 15,800 brokers to tell them the new year would bring challenges "on the horizon beyond Morgan Stanley."
Speaking at a Reuters event last June, Mr Fleming said he hoped to reshape the bank's wealth management's workforce in the coming years to include more women and millennial advisors, and was investing more in the firm's technology in order to attract them.
In addition to his new role, Mr Kelleher will take on Mr Fleming's role overseeing wealth management. His elevation to president makes him the second most powerful executive at Morgan Stanley and the obvious successor to Gorman, who is nearly six years into a turnaround plan.
But analysts said Mr Gorman was in no hurry to leave. "James Gorman's going to be there a long time. I'm not really thinking about who's going to succeed him when he leaves," Sandler O'Neill analyst Jeff Harte said.
A trading veteran known for his sarcastic sense of humour, Mr Kelleher was Morgan Stanley's chief financial officer during the 2007-09 financial crisis and is currently overseeing an overhaul of its fixed-income trading business, with 1,200 jobs set to be axed worldwide.
Rafferty Capital Markets analyst Dick Bove said the appointment of Kelleher was about creating a balance of power at Morgan Stanley between wealth management, where CEO Gorman's expertise lies, and the securities unit overseen by Mr Kelleher.
"Why would you have two wealth management guys running the company? If you do that, you're signaling to anyone who doesn't work in wealth management that they have no future at Morgan Stanley," he said.
It is the second time Mr Kelleher, a 27-year veteran of the bank, has won out in internal power struggles.
In 2012, Paul Taubman, one of Morgan Stanley's top dealmakers, left the bank after Mr Kelleher was named as sole head of sales and trading, a division they had run jointly.