Morgan Stanley says it is on track to raise some $8 billion via recent equity and debt offerings, including the exercise of the over-allotment option, and is firming up more details on its joint venture with Smith Barney.
"As we prepare to close the Smith Barney deal, these successful offerings will allow us to maintain some of the strongest capital levels in the industry," says Morgan Stanley CEO John Mack.
These steps and other moves are being handled well, according to at least one industry expert. "They are doing a darn good job on this," says Chip Roame, head of Tiburon Strategic Advisors, a financial-services consultancy in Northern California.
"At the end of the day, I'd give them an 'A' grade," Roame says. "They are filling out the management team, rolling out a brand, explaining how their venture relates to their banking operations and products. That's making a lot of progress in a tough environment."
As for the evolving competitive landscape of the wirehouses, Roame says, there will be four captive firms left standing later this year for advisors to work for. "Merrill Lynch and Wachovia are starting to look pretty similar given their bank parentage," he notes. "And UBS is likely to merge its private banking and brokerage operations."
That leaves Morgan Stanley Smith Barney in a position to become the most brokerage-centric firm, "with brokers leading it and running it," Roame says. "This doesn't necessarily mean that they'll be better or worse than the other firms, but they will be different."
New Execs for JV
Morgan Stanley's James Gorman and Smith Barney's Charlie Johnston recently tapped executives from both brokerage firms to fill key posts in the planned Morgan Stanley Smith Barney joint venture. They also created a new national branch-office system, U.S. Wealth Management, which is being organized into four areas and 20 regions.
The four areas and their division directors are:
o West – Doug Kentfield of Smith Barney;
o Central – Rick Skae of Morgan Stanley;
o Northeast – Ron Ferrelli of Smith Barney; and
o South – Bill McMahon of Morgan Stanley.
Jimmy Tighe and Bob Perry, both executives from Smith Barney, will respectively lead the New York and Los Angeles metro regions. Overall there are 11 Morgan Stanley executives and 9 Smith Barney executives serving as regional directors.
These appointments will become effective at the close of the venture, which is expected to take place in the third quarter of 2009, the company says.
John Campbell, now serving as Morgan Stanley's New York City district manager, will serve as national director of business development for the venture. He reports to Doug Ketterer, COO of U.S. Wealth Management.
The divisional directors of business development are:
