Shortage of deal-making hits business at Morgan Stanley
A shortage of dealmaking has hit business at Morgan Stanley.
The Wall Street giant saw a sharp drop in investment banking revenues and sluggish trading in the third quarter of the year.
Worries about the global economy, including rising interest rates in the US and a sluggish recovery in China, have dented the appetite for big mergers and acquisitions.
Geopolitical concerns: Morgan Stanley saw a sharp drop in investment banking revenues and sluggish trading in the third quarter of the year
Geopolitical concerns – in Ukraine and more recently in the Middle East – have also taken their toll.
Morgan Stanley said profits fell 9 per cent to £2billion in the three months to the end of September. Investment banking revenues were down 27 per cent to £770million.
Despite that, chief executive James Gorman insisted that it was ‘in excellent shape, notwithstanding the geopolitical and market turmoil that we find ourselves in’.
Gorman, who announced plans to stand down in May having taken the helm in 2010, said an announcement of his chosen successor is close.
‘I don’t want to give you an exact time because that’s sort of a spoiler but we’re well into it,’ he said.
But analysts at Evercore criticised the lack of an announcement on the succession, which they said ‘is a mistake by the board as more time can only increase angst and divide parties’.
Gorman expects trading to start picking up once interest rates begin to fall.
Morgan Stanley set aside £100million in provisions for credit losses, surging from £28million in the same quarter last year, driven by worsening conditions in commercial property.
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