Dive Brief:

• Morgan Stanley named Eli Gross and Simon Smith global co-heads of investment banking, according to an internal memo seen Monday by the Financial Times, Bloomberg and Reuters.
• Gross and Simon, who both joined Morgan Stanley in 1998, replace Susie Huang and Mark Eichorn, who will become executive chairs of the division and lead a newly formed group of senior bankers aiming to deepen the bank's dealmaking efforts across industry groups and geographies, according to the memo.
• “This organizational structure enables us to maintain the stability and strategic excellence of Mark and Susie, while the succession of Eli and Simon delivers on the global mission of our integrated investment bank,” Ted Pick, Morgan Stanley’s co-president, wrote in the memo, according to the Financial Times. The shuffle will “marry the partnership culture of the last decade with a pivot to long-term growth,” Pick added.

Dive Insight:

Morgan Stanley rolled out a raft of promotions in May 2021 — including installing Pick as one of two co-presidents — in what observers saw as the start of a generational succession plan at the bank. 

CEO James Gorman bolstered that characterization at Morgan Stanley’s annual shareholder meeting this May, saying last year’s moves put the bank in a position to thrive “for many decades after I’m gone,” elevating “both a generation of leadership immediately behind me and the generation behind them.”

Last year’s promotions immediately set to mind the timetable for succession at the top of the bank, where Gorman has reigned since 2010. Gorman more recently said he intended to remain CEO for at least three more years. When a shareholder pressed as to whether he would retire soon, Gorman replied, “‘Soon’ is the operative word, and the answer to that is no.”

Monday’s leadership shuffle in Morgan Stanley’s investment-banking unit comes as global merger volume has seen a 17% slump throughout the first half of 2022 — despite record mergers-and-acquisitions activity last year, according to Bloomberg.

Morgan Stanley ranks fourth in global investment banking revenue so far in 2022, behind JPMorgan Chase, Goldman Sachs and Bank of America, according to Dealogic data. Those banks and Citi, on average, are expected to report a nearly 40% year-over-year drop in investment banking fees in their second-quarter earnings, Bloomberg estimated.

Smith has led Morgan Stanley’s European investment-banking franchise for the past seven years. Gross, meanwhile, has served as the bank’s point person for investment banking in the transportation, freightech, logistics and infrastructure spheres, according to his LinkedIn profile.

Huang, who began at Morgan Stanley in 1984, ascended to co-head of investment banking four years ago. Eichorn was tapped as co-head of investment banking in 2012.