Morgan Stanley chief executive James Gorman has said that the bank’s employees will do their work “inside Morgan Stanley offices”, hinting at a widespread return when Covid-19 restrictions allow.
Gorman said that while there would be a “nuanced” approach to how the bank would communicate with its employees on unwinding home-working arrangements globally, an office return was likely.
“Make no mistake about it, we do our work inside Morgan Stanley offices,” he said.
“That’s where we teach, where our interns learn,” he added, speaking at the bank’s financial services conference on 14 June. “That’s how we develop people, that’s how you build all the soft hues that go with having a successful career that aren’t just about Zoom presentations.”
Since September last year, Gorman has been gradually increasing the number of days he works in Morgan Stanley’s New York office, and is now in four days a week, he said. In New York, which has opened up in recent weeks, Gorman said: “If you can go to a restaurant in New York City, you can come into the office, and we want you in the office”.
He added that 90% of employees working in Morgan Stanley offices have been vaccinated against Covid-19.
The bank CEO said that people thinking they can be paid “New York rates” and spend the majority of their working week elsewhere “doesn’t work”.
Gorman expects more flexibility, but added: “By Labour Day [in September], I’ll be very disappointed if people haven’t found their way into the office.”
Gorman also said that the firm’s investment bank performance in the second quarter of 2021 will not match the “gangbusters” first three month of the year, as fixed income revenues have ebbed.
He said that the second quarter was more likely to normalise, but would not match revenues earlier this year or during the same period in 2020, which were some of the strongest in its history.
Morgan Stanley’s institutional clients unit, which houses its investment bank, hit record revenues of $8.6bn in the first quarter of 2021, helping push revenues for the overall firm to $15.7bn.
“We obviously won’t be where we were in the first quarter, which was gangbusters,” said Gorman. “But it is certainly not a bad quarter — the M&A pipeline and closures has been very strong, and equities has rebounded very nicely.”
Fixed income revenues, which jumped by 44% to about $3bn in the first quarter, are likely to be down. Gorman said the fixed income unit has gained market share, up from 5% after the 2008 financial crisis to about 10%.
Gorman also spoke about possible succession following the appointments of Ted Pick, the head of Morgan Stanley’s institutional securities unit, and Andy Saperstein, head of wealth management, as co-presidents, lining them up as the next likely contenders for the chief executive post.
The bank came under fire for its lack of diverse candidates, particularly as the appointment announcement came shortly after rival JPMorgan promoted two women into key positions.
Gorman said that while a number of women and ethnic minorities were in senior roles, there were no suitable candidates to take the top job. “We can’t take something that doesn’t exist and just pretend we have people who are ready to take on more responsibilities,” he said.
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