John Mack

Can James Gorman make Morgan Stanley great again?

March 30, 2011: 5:00 AM ET

He has been CEO of the storied but bruised investment bank for a year.  All he has to do is reduce risk and restore profits at the same time.

By Duff McDonald, contributor

FORTUNE -- On an April Friday last year, Morgan Stanley CEO James Gorman received a call while on vacation with his family in Anguilla: In just four days the Agricultural Bank of China was holding a "bake-off" for investment banks that wanted to handle its initial public offering. Ted Pick, co-head of equities for Morgan Stanley, told Gorman that the CEOs of other banks would be there. It was crucial that he come along. Gorman cut his vacation short and joined Pick on a plane to Beijing three days later.

Not long after his new boss was buckled in for the 16-hour flight, Pick informed Gorman that his part of the presentation would last for all of three minutes. And when they got to China, it turned out that none of the other promised investment bank CEOs were there -- Pick had played Gorman about that small detail.

Rather than throw a tantrum, as many Wall Street chieftains would have, Gorman just laughed. His nonchalance was justified. Morgan Stanley (MS) was chosen as one of the lead investment banks on the largest IPO in history -- a $22 billion offering. The firm earned nearly $30 million in fees for its efforts. More

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