Would The Last Person Out Turn The Lights Off ?

'Is there anybody there ?', asked a worried Winnie the Pooh, as he peered through the open door. For Pooh was not in the familiar surroundings of Hundred Acres Wood, but in Docklands - attempting to gain entry to Morgan Stanley (He'd heard that there might be a few job vacancies).

Morgan Stanley suffered two further high profile defections in London this week (post bonuses). Michael Frydman has quit as co-head of the firm's prop trading team in the City to join hedge fund Peloton Partners. And Paulo Pereira, head of Morgan Stanley's European M&A business, and one of the most well known investment bankers in the region, quit on Wednesday to go work with former firm colleagues Joseph Perella and Terry Meguid, who are in the process of establishing their own investment banking boutique. With the firm suffering from a number of senior defections in the last few weeks (in London and New York, and in China and India), wags are wondering if there will soon be anyone left at Morgan Stanley.

But actually, these high-level departures should be seen in a positive light. The arrival of CEO John Mack after the Phillip Purcell debacle last year, was bound to put a few noses out of joint. With bonus cheques in the bank, some senior staff, who have had a few months to survey the post-Purcell landscape, have simply voted with their feet. From Morgan Stanley's perspective, it's better to have volunteers in key positions, rather than pressed men. So, while the negative publicity which surrounds senior resignations might not be welcome, life goes on at the firm and Mack is putting the pieces back together.

Morgan Stanley moved quickly to replace Pereira. Gavin MacDonald, 44, is the firm's new head of European M&A. The firm has also hired a team from Millennium Partners in New York as it establishes a roster of in-house hedge fund talent. And Mack is said to be in discussions to acquire fixed income fund manager Black Rock for around $8bn. So there's life in the old dog yet.

So, don't write off Morgan Stanley - the firm is bigger than just a few departing bankers (however well-rated and well paid). Remember Bloomberg's famous 2004 description of Morgan Stanley's M&A franchise (the news agency described the firm as an 'also-ran' in M&A, during a time that it was going through a bad patch) ? Within weeks the firm had done a number of lucrative deals, and was back up near the top of the league tables. And it's been there ever since. Only a fool would underestimate Morgan Stanley now.