June 7, 2010 3:00 am
Morgan Stanley has launched a push to close the gap with more profitable rivals such as Goldman Sachs and JPMorgan Chase, creating a team of senior bankers to cross-sell more of its products to hundreds of companies and investors.
James Gorman, chief executive, told the Financial Times the initiative was crucial to his strategy of boosting revenues while eschewing the trading bets and investments in property and hedge funds that hurt the bank.
In 2009, Morgan Stanley recorded its first loss in 23 years as a public company, while Goldman and JPMorgan earned large profits. Morgan Stanley returned to the black in the first quarter of 2010.
Mr Gorman, who took over in January from John Mack, said the new client taskforce would break down internal barriers that prevented Morgan Stanley from selling a wider range of products and services to fund managers and companies.
"Clients want to see more of our intellectual capital and our expertise, and they want to see more of the range of products that we have," said Mr Gorman, who has met more than 300 clients since taking the helm.
"If I have a criticism, it would be that historically we've approached clients with a product-group face, rather than sitting back and saying, 'How do we bring all that we have at Morgan Stanley from research through to the specific product groups to them?'"
Most banks claim to offer a full suite of services ranging from takeover advice to derivatives structuring and securities trading.
In practice, cross-selling is made difficult by the complexity of different products and the rivalries among bankers.
Mr Gorman rebuffed criticism that Morgan Stanley would be at a disadvantage to lenders such as JPMorgan and Bank of America that use their balance sheets and lending relationships to win advisory and trading business.
"It's a slippery slope to say your balance sheet isn't big enough. That can lead you to expand too aggressively and increase your leverage too much," he said. "I'm not concerned about size; in fact, if anything, size is a prop that people use that can undo you. I'm much more focused on discipline. We're big enough; it's a question of how smart we are in using our resources.
"We've created a new organisation focused on our most important and complex clients to ensure we bring together a team that has all of Morgan Stanley represented on it," Mr Gorman said.
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