Morgan Stanley Ousts Petrick as Trading Chief, Promotes Porat
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By Christine Harper
Dec. 9 (Bloomberg) -- Morgan Stanley ousted sales and trading chief Mitch Petrick after his division’s revenue fell short of rivals and promoted Ruth Porat, head of the financial institutions group, to become chief financial officer.
Porat, 52, is taking a role held by Colm Kelleher, who will become co-president of Morgan Stanley’s institutional securities business with Paul Taubman, the 48-year-old chief of investment banking. Kelleher, 52, will focus on sales and trading, while Taubman will manage investment banking, with both overseeing capital markets. The changes take effect on Jan. 1, the New York-based firm said in a statement.
“This is an attempt to groom the next generation of senior management and re-initiate a partnership culture at the top,” said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. “The risk is that the co-heads are unable to work together, but that is the challenge of any partnership.”
Petrick, 47, has been Morgan Stanley’s head of sales and trading for two years. Revenue from the business was $6.87 billion for the first nine months of this year, down from $21.4 billion in the same period a year earlier, according to a company filing. Trading revenue this year was damped by $4.9 billion in writedowns on the firm’s own liabilities as credit spreads narrowed, while 2008 results included $11.8 billion in gains as the spreads widened.
James Gorman, the firm’s co-president, is scheduled to succeed John Mack as chief executive officer at year-end. Gorman’s expertise is in managing retail brokerage and asset- management divisions, not the securities businesses that traditionally constituted Morgan Stanley’s core. Mack, who has been chairman and CEO since 2005, is remaining as chairman.
Results at Rivals
Goldman Sachs Group Inc.’s sales and trading revenue surged to $27.3 billion from $13.7 billion a year earlier and JPMorgan Chase & Co.’s trading division generated $17.9 billion, up from $6.6 billion, according to company filings. Morgan Stanley has said it plans to hire 400 employees to bolster the sales-and- trading division.
Petrick, who has a background in distressed debt and principal investments, is considering other roles at Morgan Stanley.
“The firm is in ongoing discussions with Mr. Petrick about other opportunities,” said Jeanmarie McFadden, a spokeswoman at Morgan Stanley, without elaborating. Petrick didn’t respond to a phone message and e-mail seeking comment.
Other executives to lose their jobs in recent years because of the performance of the sales-and-trading division include Roberto Hoornweg, who was global head of interest rates and currencies until he left in July, when the firm hired Jack DiMaio to replace him.
Mack’s Moves
In November 2007, Mack ousted Zoe Cruz, the co-president who oversaw trading, and demoted trading chief Neal Shear because of bad trades that resulted in the first quarterly loss as a publicly traded company. Shear, who accepted a lesser role as chairman of the commodities business before leaving Morgan Stanley in March 2008, was succeeded in the trading job by Petrick.
Morgan Stanley, up 88 percent this year, closed in New York Stock Exchange composite trading yesterday at $30.15.
Porat, who’ll be the first female CFO in firm history, has been global head of the financial institutions group since 2006. She joined Morgan Stanley in 1986 as a member of the mergers and acquisitions department and went on to help establish the firm’s efforts to provide corporate finance services to buyout firms. She was also co-head of the global technology group and helped lead the equity capital markets business.
‘She’s Strategic’
“She’ll make an excellent CFO,” said Blackstone Group LP President Tony James, who said in an interview that he’s known Porat for about 20 years and once tried to hire her to work at Donaldson Lufkin & Jenrette Inc. “She knows financing markets, she’s strategic in terms of areas of growth, she has a great way with people.”
Porat was a key adviser to Blackstone, when it became the first major buyout firm to go public in June 2007. The IPO raised $4.75 billion.
“She helped us make the right calls in terms of the right way to position the firm,” James said. “She keeps a cool head when people get stressed out and tense.”
Porat holds an MBA from the Wharton School at the University of Pennsylvania, according to a statement from Morgan Stanley. She has a master’s in economics from the London School of Economics and a bachelor’s degree from Stanford University.
Thomas Nides, chief administrative officer and a long-time colleague of Mack’s, will take on additional responsibility as chief operating officer, the company said. He will take over operations and technology from Jim Rosenthal, who will become head of corporate strategy and chief operating officer of the Morgan Stanley Smith Barney retail joint venture.
Walid Chammah, the 55-year-old co-president with Gorman, 51, said in September he will give up that role and keep his other position of chairman of Morgan Stanley International in London. In yesterday’s announcement, the firm said Chammah will be chairman of a new international operating committee comprising the regional heads in Europe, Latin America and Asia.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
Last Updated: December 8, 2009 19:00 EST
