Morgan Stanley

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What a difference a financial crisis makes. Morgan Stanley, once an élite white-shoe institution is now the largest brokerage house in America.

Background:
Morgan Stanley is a global financial services provider headquartered in New York City, New York, United States. It serves a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 33 countries around the world with 600 offices, with an approximate employee workforce of 45,000. The company reports $779 billion as assets under its management. It is headquartered in Midtown Manhattan, New York City. The corporation, formed by J.P. Morgan & Co. employees Henry S. Morgan (grandson of J.P. Morgan), Harold Stanley and others, came into existence on September 16, 1935. In its first year the company operated with a 24% market share ($1.1 billion) in public offerings and private placements. The main areas of business for the firm today are Global Wealth Management, Institutional Securities and Investment Management.

Recent History:
The company found itself in the midst of a management crisis in the late 1990s that saw it lose a lot of talent and competence and ultimately saw the firing of its then CEO Philip Purcell in 2005.

On September 21, 2008, it was reported that the Federal Reserve allowed Morgan Stanley to change its status from investment bank to bank holding company.On September 29, 2008, it was announced that Mitsubishi UFJ Financial Group, Japan's largest bank, will take a stake of $9 billion in Morgan Stanley equity. In the midst of the October 2008 stock market crash, concerns over the completion of the Mitsubishi deal caused a dramatic fall in Morgan Stanley's stock price to levels last seen in 1994. The stock grew considerably after Mitsubishi UFJ closed the deal to buy 21% of Morgan Stanley on October 14, 2008.

Today:
Mack has spent much of the past year putting Morgan Stanley on saferground. He has dramatically lowered borrowing and shut down the firm's proprietary trading desk. He changed Morgan from a Wall Street dealer to a bank holding company, and more than tripled the firm's deposit base, which is a safer source of capital. And in a major break from the bank's 70-year history he de-emphasized investment banking as the driver of Morgan Stanley's profits. In June, he completed the purchase of a majority stake in Salomon Smith Barney's brokerage division, instantly turning Morgan Stanley, once an élite white-shoe institution, into the largest brokerage house in America.

In mid September 2009, Morgan Stanley announced that James Gorman would replace Mack in January 2010.Unlike Mack, and nearly every other head of Morgan Stanley, Gorman has never been an investment banker.

Gorman, a former McKinsey consultant, joined Morgan three years ago from Merrill Lynch, where he had run that firm's brokerage force. At Morgan, he was in charge of revamping the firm's brokerage division, and recently integrating the Smith Barney acquisition. Observers say Gorman's background will likely move Morgan further away from its roots.

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