NEW YORK – Morgan Stanley selected insider Ted Pick to become its new chief executive, succeeding Mr James Gorman after a 14-year run that reshaped the US bank.

Mr Pick, a co-president and three-decade veteran of the bank, will be elevated to the top role in January and join the board, the bank said on Wednesday.

Mr Gorman, 65, will stay on as executive chairman.

In tapping Mr Pick, 54, the firm is turning to the man credited with spurring a revival in its trading business after a perilous stretch during the 2008 financial crisis – a period when clients ditched Morgan Stanley and doubts about its ability to survive reverberated around Wall Street.

The Australian-born Mr Gorman, once a surprise choice for CEO, rescued the bank from that near collapse and engineered a multi-year transformation with wealth management at its core.

That strategic overhaul was accelerated by two signature deals announced in 2020, turning Morgan Stanley into a money-management powerhouse barrelling towards a US$10 trillion (S$13.7 trillion) goal – and catapulting its market value above that of arch-rival Goldman Sachs.

“The board’s selection of Ted Pick is an outstanding one,” Mr Gorman said. “He is battle-tested, understands complex risk and works very effectively not just in the US, but around the globe. In short, he is an outstanding executive and leader.”

Mr Pick beat out two other contenders – co-president Andy Saperstein and Mr Dan Simkowitz, who has led investment management.

Morgan Stanley said on Wednesday that Mr Saperstein will become head of wealth and investment management and named Mr Simkowitz co-president and head of institutional securities.

Colourful vocabulary

Once known for his colourful vocabulary, Mr Pick has made Morgan Stanley his lifelong home – except for a stint in business school.

He ascended through the ranks after a less salubrious start – as the last person hired into his analyst class – and his early rise was tied to his role as a capital-markets banker, helping companies raise money by selling stock. But that changed after 2008.

Then, he was thrust into leading the equities unit at a time when the bank was haemorrhaging clients.

Under Mr Pick, the unit went from hobbled to healthy, and even surged past competitors to a No. 1 ranking.

After his success in equities, he had another challenge: Resuscitate the fixed-income division, the bank’s perennial sick child that struggled to keep pace with larger rivals.

The division’s recovery since then is touted as a success story by the bank’s leadership.

But the trading business has also suffered some black eyes. The prime brokerage division that Mr Pick helped build into Morgan Stanley’s crown jewel was caught wrong-footed in 2021, when Bill Hwang’s Archegos Capital Management collapsed.

The revelation that Morgan Stanley lost US$911 million on dealings with the family office outed it as US banking’s biggest loser in the debacle.

The bank also recently disclosed it is in conversations with United States prosecutors to resolve a probe into its block trading practices – a business that falls under Mr Pick’s command.

Ceded ground

The more pressing challenge for Mr Pick will be to restore market share in the investment bank, after ceding ground to both Goldman and JPMorgan Chase and Co.

The firm is waiting on a rebound in capital markets and deal-making activity to help revive earnings in that business from depressed levels.

At the same time, investors who had been heaping praise on its wealth unit are now seeking assurance that it can continue to gather assets at a rapid clip.

Mr Pick will be able to lean on Mr Gorman, who has indicated he wants to help with the transition without specifying how long he plans to stay as chairman.

When Mr Gorman was made CEO in 2010, his predecessor John Mack held the role of chairman for two years before handing over that title to Mr Gorman as well. BLOOMBERG