We all knew John Mack was a man on a mission. Determined to put Morgan Stanley right, he has been working hard in the last few months to pull together a blue-print for the future. Speaking at a financial services conference earlier this week, Mack admitted that his firm had 'lagged the industry'. He said that he planned, however, to double profits in the next five years and pointed to the fact that, although there were 'opportunities to reduce costs, the real upside is revenues'.
Mack plans to beef up his firm's prop trading capability, by setting aside more capital, and he also plans to make $1bn available for equity investments and to purchase hedge fund and mortgage companies. The firm will also increase its resources in derivatives. Morgan Stanley's boss is also happy to have a mixed portfolio of businesses. He said that he had 'a mix....that I like having right now.....(however), we need to see what we can do if we correctly execute (a combined strategy)'.
Finally, the firm is said to be asking around 1,000 senior bankers to sign new contracts which are designed to keep them out of the market for up to six months following their departure from the firm. Morgan Stanley wants the staff to sign up by November 30th. A spokesman said that the firm, 'like most of its competitors, requires senior employees to provide advance notice if they intend to leave. The change in our notice period simply brings us in line with our major competitors'.