M Stanley to recruit hundreds of traders

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M Stanley to recruit hundreds of traders

By Francesco Guerrera and Justin Baer in New York
Published: January 31 2010 22:37 | Last updated: January 31 2010 22:37

function floatContent(){var paraNum = "3"
paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}Morgan Stanley
plans to boost its underperforming securities business by hiring
several hundred traders over the next few years in an effort to close
the gap with Wall Street rivals, according to James Gorman, the new
chief executive.The securities business is crucial to Mr Gorman’s strategy of reviving Morgan Stanley’s fortunes after a loss-making 2009 by marrying a strong investment bank with a large US retail brokerage operation.EDITOR’S CHOICE

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Mr
Gorman, who took over as chief executive from John Mack in January,
told the Financial Times that Morgan Stanley’s sales and trading unit
had failed to reach many of the investors and companies who wanted to
do business with the bank.“We are not showing clients enough,”
he said. “We don’t have people on the ground. We are not sufficiently
penetrated with large clients and there are some smaller clients we are
missing out on.”In 2009, Morgan Stanley’s sales and trading operations lagged behind rivals such as Goldman Sachs and JPMorgan Chase in taking advantage of a boom in fixed income, commodities, currencies and interest rates trades.In
2009, Morgan Stanley had revenues of $5bn in fixed income trading, or
$8.8bn excluding an accounting loss, compared with $17.6bn earned by
JPMorgan and the $23.3bn recorded by Goldman.Morgan Stanley
hired 350 people in the securities business last year. However, Mr
Gorman, whose first move as chief executive was to overhaul the top
management of the securities and investment banking unit, said more
needed to be done.He said: “We need to seriously grow our
footprint in products like currencies, equity derivatives, commodities.
We could easily be 25 per cent bigger than we are. [Investors’] bias is
to do more business with us, the burden is on us to deliver.”Morgan
Stanley does not break down the number of employees in its sales and
trading unit, but people familiar with the company said Mr Gorman’s
plans could lead to the recruitment of several hundred people over the
next three years or so.Mr Gorman’s hiring push underlines Wall
Street’s belief that last year’s trading boom, partly fuelled by huge
injections of liquidity from governments, will continue.But it
is also an admission that the decision by Mr Mack, who is still
chairman, to focus on the complex derivatives popular before the crisis
left Morgan Stanley ill equipped to benefit from the pick-up in the
trading of simpler fixed income products.“In the past there was
an institutional bias towards more complex, structured products which
served us well at the time,” Mr Gorman said.In December, Mr Gorman named Colm Kelleher,
a former finance chief, and Paul Taubman, a veteran investment banker,
as co-heads of the securities and investment banking division. Mitch
Petrick, global head of sales and trading, stepped down.After
recording its first yearly loss as a public company in 2009, Morgan
Stanley has to recover the ground lost to Wall Street’s other
bulge-bracket firms.Mr Gorman, a former McKinsey consultant and
Merrill Lynch executive, called 2010 “the year of execution. We now
know what we are and what we are not ... I am very comfortable with
what we are. Now we have to deliver results”.


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