Morgan Stanley’s world head of prime brokerage, Ed Keller, is leaving his function, the financial institution mentioned in a memo to employees.
The transfer comes after the division triggered a $911m hit to Morgan Stanley’s income because of trades with the collapsed household workplace Archegos Capital Administration, though the financial institution mentioned it was not linked and Keller would return to a brand new function after coping with a well being subject.
“We want Ed a really speedy restoration and stay up for having him again within the workplace quickly,” the financial institution’s three co-heads of equities, Alan Thomas, Gokul Laroia and David Russell, wrote within the memo despatched late on Monday.
Penny Novick and Kim Shaw will take over from Keller as world co-heads of prime brokerage.
Upon Keller’s deliberate return from the well being subject, he’ll tackle a brand new senior advisory place on the financial institution participating with main shoppers, in line with the memo.
Banks’ prime brokerage divisions cater to hedge funds and rich shoppers providing a variety of providers together with stock lending, leverage and trade execution.
The potential dangers in that enterprise have been highlighted in March when a string of banks, together with Morgan Stanley, suffered important losses from the blow-up of Archegos, which managed the household wealth of former hedge fund supervisor Invoice Hwang.
Morgan Stanley’s $911m hit was smaller than at some banks which have been slower to exit their positions. Switzerland’s Credit score Suisse misplaced greater than $5bn and Japanese lender Nomura lost almost $3bn. Goldman Sachs escaped largely unscathed.
Keller joined Morgan Stanley’s prime brokerage enterprise in 2009.
“Throughout these 12 years Ed has been as accountable as anybody for the expansion of our prime brokerage enterprise and by extension for the return of our equities franchise to prominence,” mentioned the memo from Thomas, Laroia and Russell.
Novick, 48, was most just lately Morgan Stanley’s world head of futures and over-the-counter derivatives clearing and Shaw, 49, was co-head of prime brokerage within the Americas.
“Penny’s and Kim’s mixed 40-plus years on the agency and the vital roles they’ve held all through their careers inside our world prime brokerage franchise will guarantee we proceed to maintain our main, world-class prime brokerage enterprise,” Thomas, Laroia and Russell wrote.