By Saeed Azhar and Tatiana Bautzer
NEW YORK (Reuters) -Morgan Stanley plans to buy more wealth and asset management businesses, and is keeping an eye on potential targets, CEO James Gorman said on Wednesday.
While a deal is not imminent, the bank is interested in private banking opportunities in the United States, Asia and parts of Latin America, Gorman told analysts on a conference call after the company reported its first quarter earnings.
“There is no doubt we can, and over the years, we’ll do more acquisitions,” Gorman said. “It will be in the wealth and asset management space and we constantly keep a list of who’s attractive and who would be a good fit.”
Gorman has transformed the Wall Street powerhouse into a more diversified firm that is less reliant on its traditional strengths — trading and investment banking — since taking the helm in 2010.
He struck major deals including the acquisitions of money manager Eaton Vance, online broker E*Trade, and stock-plan manager Solium Capital. He was also the key architect behind Morgan Stanley’s purchase of Smith Barney, a brokerage and investment adviser that became a cornerstone of the bank’s wealth management arm.
When asked about the company’s declining revenue in investment management after the Eaton Vance deal, Gorman said he was “thrilled” with the purchase and said it was too soon to judge its success because of challenging market conditions.
“A lot of people said that Smith Barney deal was a dumb idea, and a lot of people said E*TRADE is a dumb idea, and a lot of people said we overpaid for Solium,” Gorman said.
“These things have moments of sort of settling, if you will. It’s like a good house — its foundations have to settle.”
Morgan Stanley’s profit beat expectations as rising revenue from wealth management in the first quarter offset declines in investment banking and trading. Wealth management accounted for 45% of firm’s revenue, the results showed.
Its client assets stood at $4.6 trillion, up 9% from the fourth quarter. Gorman has set a target of reaching $10 trillion in assets.
The wealth division brought in $110 billion in net new assets, of which only about $20 billion came from regional banks in response to the March banking crisis, Chief Financial Officer Sharon Yeshaya told Reuters in an interview.
Despite strains at some U.S. banks, Gorman said the industry is not in a banking crisis, nor was it facing problems comparable to the mortgage crash in 2008.
Meanwhile, its U.S. wealth business is “just going to be an asset gathering monster,” Gorman said. “We know what we’ve got here, and it’s a killer machine.”
(Reporting by Saeed Azhar and Tatiana Bautzer in New York and Manya Sain in Bengalurui; Editing by Lananh Nguyen and Nick Zieminski)
