MORGAN STANLEY has moved to settle the uncertainty surrounding the leadership of the investment bank by demanding a shortlist of candidates for chief executive within two weeks. It wants to choose a successor before the end of next month.
The decision to step up the search to replace Philip Purcell, made at a two-day board meeting in New York this week, comes as Morgan Stanley revealed that its profits for the second quarter of the year were much lower than it had indicated less than two weeks ago.
Profits fell 24 per cent to $928 million, or 86 cents a share, from $1.22 billion. Nine days ago Morgan gave warning that profits would be about 20 per cent lower. Most of the extra shortfall was accounted for by a $140 million sum set aside to pay for legal expenses related to the Parmalat case.
It is understood that Morgan Stanley directors agreed to tell Spencer Stuart, the executive search firm hired to look for a new chief executive, that the company should present five or six prospective candidates to the bank within a fortnight.
“There was a feeling that they need to have a solid progress report on the search,” a source close to the meeting told The Times. “The investor community is already pretty nervous about the empty wheelhouse.”
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The source also said that there was a strong feeling that an internal candidate, such as Sir David Walker, the chairman of Morgan Stanley International, or Zoe Cruz, the bank’s co-president, would make a better replacement than someone from outside the firm.
John Thornton, the former Goldman Sachs president, is understood to be a strong outside candidate. John Thain, chief executive of the New York Stock Exchange, has been approached but is understood not to be keen to give up his present job.