Morgan Stanley chief executive James Gorman 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 on how the bank would communicate with its employees on unwinding its 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.”
Gorman has been gradually increasing the number of days he works in Morgan Stanley’s New York office since September last year and is now in four days a week, he said. In New York, which has opened up in recent weeks, Gorman said “you can come into the office and we want you in the office”,
He added that 90% of employees working in offices have been vaccinated against Covid-19.
The bank CEO said that people who think 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 its 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, and 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 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’s certainly not a bad quarter – the M&A pipeline and closures has been very strong, and equities has rebounded very nicely.”
Fixed income performance, which jumped by 44% to around $3bn in the first quarter, is likely to be down. Gorman said the fixed income unit has gained market share from 5% after the 2008 financial crisis to around 10%
Gorman also spoke about possible succession following the appointments of Ted Pick, the head of its institutional securities unit, and Andy Saperstein, head of wealth management, as co-presidents lining them up as the next likely chief executive.
The bank came under fire for a lack of diverse candidates, especially 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 not suitable candidates to take the top job. “We can’t take something that doesn’t exists and just pretend we have people who are ready to take on more responsibilities,” he said.
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