By Tatiana Bautzer and Lananh Nguyen
NEW YORK (Reuters) - When Ted Pick takes over as the new CEO of Morgan Stanley next week, the three-decade bank veteran's frank manner and steady hand will help him steer the firm through a dealmaking slump.
Pick's cool head in difficult situations is an asset, said Tom Glocer, Morgan Stanley's independent lead director since 2017 and former Reuters CEO.
"The great sin that gets people into super trouble at banks is the trader's instinct to hold on (to losing positions)... Ted has that ability to be disciplined" and take action, Glocer said.
Over a frenetic weekend in 2021, Pick worked with a team into the night to cut Morgan Stanley's exposure to Archegos Capital Management, said Glocer. The family office's collapse triggered huge losses at global banks.
Morgan Stanley lost more than $900 million in the Archegos ordeal, in what was otherwise a bumper year for the firm. Credit Suisse and Nomura took hits of $5.5 billion and $2.9 billion, respectively, while Goldman Sachs and Deutsche Bank exited their positions relatively unscathed.
Pick, 55, will be elevated at a time of heightened economic uncertainty and geopolitical tensions. Dealmaking conditions are improving, but activity remains dismal, posing challenges for the banking industry.
"He goes from boom to bust easily," said a close friend, referring to Pick's career navigating market cycles. The executive worked alongside Pick for more than 20 years and declined to be identified discussing internal Morgan Stanley business.
Pick declined to comment for this story.
The executive's success on initial public offerings won him support from private equity investors, which helped when he handled Morgan Stanley's stock buyback program during the global financial crisis.
"He got along well with some shareholders and was also smart playing poker with the market when the firm did not have a lot of liquidity," the former executive said.
Morgan Stanley was saved in 2008 by a U.S. government bailout and emergency investment from Mitsubishi UFJ (NYSE:MUFG). As the tumult spread through the financial system, Pick convinced Roberto Mignone, founder of hedge fund Bridger Capital, to keep his money at the bank as a sign of confidence. The two have been close friends ever since.
"Ted never forgot that," Mignone said. "He's an old school Wall Street guy that cares about long-term relationships."
Years later, Mignone gifted Pick a replica of the Titanic as a joking reminder of potential disasters.
Billionaire and former Blackstone (NYSE:BX) executive Hamilton "Tony" James said the private equity giant chose Morgan Stanley to lead its 2007 IPO mainly because of Pick. The banker later advised Blackstone as its stock dove to $3 after the financial crisis, from a debut of more than $30.
"He's a truth teller, I was very impressed by that," said James. "He tells you straight out when something is not going to work."
The banker once joined James for fly fishing in the Brazilian Amazon (NASDAQ:AMZN) in search of Peacock bass, even though he had never fished, nor met James' dozen other friends on the trip.
"He threw himself into it and was the life of the party," James said.
While Pick gained prominence for turning Morgan Stanley's equities business into a global leader, he also tackled its challenges. The executive turned around its fixed income division, cutting 25% of employees, and helped raise capital when the bank was on the brink of collapse in 2008.
He inherits a company that current CEO James Gorman, 65, built into a wealth management juggernaut since taking the helm in 2010. Australian-born Gorman will become executive chairman for a transitional period after Pick is elevated, and will also join the board of Disney next year.
Steady revenue from the wealth unit has fueled a 214% climb for Morgan Stanley's stock under Gorman's leadership, compared with 126% at rival Goldman Sachs and 304% at JPMorgan Chase (NYSE:JPM) in the same period. At $152 billion, Morgan Stanley's market capitalization exceeds Goldman's by $28 billion.
Pick "has a broad range of experience, and appreciates the value of wealth management," said Colm Kelleher, the chairman of UBS Group, who preceded Pick as president of Morgan Stanley and left in 2019.
The new CEO will present his first quarterly earnings in mid-January and give a strategy update that will be closely scrutinized by investors. His debut as CEO follows a 27% decline in investment banking revenue for the third quarter.
LOW PROFILE
While Pick holds one of the biggest jobs in finance, he keeps a low profile. He tends to celebrate birthdays privately with his wife and two daughters, ducking plans for larger gatherings, said Mignone.
Despite his busy schedule, Pick enjoys attending his daughters' school events and sports matches, his friends said. The incoming CEO is also known to be a foodie who is always willing to try new cuisines.
A fan of the New York Rangers ice hockey team, Pick prefers to buy his own tickets and attend games with family instead of entertaining clients. The executive lives in New York's Upper East Side and spends vacations at his house in Martha's Vineyard.
In a break with Wall Street tradition, Pick's competitors for the top job -- executives Andy Saperstein and Dan Simkowitz -- will stay on with expanded roles. Both will get $20 million bonuses if they stick around for at least three more years.
Gorman, meanwhile, may remain for up to a year to help with the transition. Rob Kindler, the global chair of mergers and acquisitions (M&A) at law firm Paul, Weiss, Rifkind, Wharton & Garrison, welcomed the arrangement.
"James is there because employees and stockholders wanted him to be there," said Kindler, who previously ran M&A at Morgan Stanley. "But I really don't think Ted needs any handholding. He is ready."