NEW YORK — Morgan Stanley confirmed Thursday that John Mack will step down as chief executive, effective Jan. 1.
The move marks the end of a tumultuous period in which the investment bank suffered both record losses and profits. People close to the situation told The Wall Street Journal earlier Thursday the move was likely.
Mack, 64 years old, will stay at the firm as chairman, while co-President James Gorman will take over as chief executive, the company confirmed. Gorman will also join the board, while the company's other co-president, Walid Chammah, will become chairman of Morgan Stanley International.
The board's lead director, Robert Kidder, said the company was fortunate to have been able to bring Mack back to Morgan Stanley four years ago. He added that, after his return, Mack "effectively stabilized the firm and reorganized [its] culture and client franchise." Kidder also said Mack oversaw the conversion to a holding company and helped the company repay government funds under the Troubled Asset Relief Program.
The move marks a significant shift for Morgan Stanley, which has scaled back from risky businesses such as proprietary trading, but which has also found that making profits after the financial crisis is difficult. Mack ramped up risk after returning to the firm in 2005 and 2006, but was unable to pull it back in time in 2007 and 2008 as the bank sustained significant losses.
In Mack's tenure, which started in mid-2005, Morgan Stanley's stock has fallen about 34%. Rival Goldman Sachs Group Inc.'s has risen about 70%.
Shares closed Thursday at $28.64 and are unchanged after the market close.
