New Morgan Stanley boss Ted Pick ‘super bullish’ on long-term targets
The new chief executive of Morgan Stanley, Ted Pick, has said he is “super bullish” on the US investment banking giant’s financial targets and predicts an end to the slowdown in dealmaking once interest rates fall.
Pick, a three-decade company veteran who took over as CEO from James Gorman on 1 January, expressed confidence that the firm would reach its long-term targets of $10tn (£7.9tn) in assets under management and a 20 per cent return on tangible equity.
“It will take some time, but I’m super bullish,” he said in an interview with CNBC at the World Economic Forum in Davos, Switzerland, on Thursday.
He separately told Bloomberg Television that M&A should rebound once the US Federal Reserve starts cutting interest rates.
“They are going to start lowering at some point, when they are ready,” Pick said. “They are going to be prudent. They will be thoughtful. And that kind of predictability is good for investment banking because you have these financial-sponsor portfolios that have been locked up that need to be liberated.”
So far, Pick’s time as CEO has been marked by Morgan Stanley’s biggest share drop in three months after its fourth-quarter results missed analsyts’ estimates due to more than $500m in one-time charges.
The bank has diversified its business model to rely less on investment banking, often seen as a volatile source of income, and more on divisions like wealth. Pick said this combination was the firm’s “secret sauce”.
“The ecosystem of being a leading wealth manager, banking individuals not institutions, and then also covering them as an investment bank or hedging the risk as a trading house, that is unique,” he told CNBC.
He added that wealth management would power the firm’s growth and the arm’s pretax margin would rise to 30 per cent, from 25 per cent last year.
Some investors argue the business has not progressed far enough towards this target. Pick said the margin would stay in the “mid-20s” for some time.