Seven top bankers from Morgan Stanley have resigned despite claims by Philip Purcell, chief executive, that morale at their division was solid. They leave a unit Purcell would retain control of under new plans to split the firm in two.
Tarek Mooro, Fredrik Plyhr, Eran Ben-Zour, Andrea Brignone, Carlo Michienzi, Matteo Pusineri and Randol Curtis, all of whom are London-based private bankers, resigned in April.
A spokesman for the bank confirmed the resignations but declined to say when the brokers, who worked in the private wealth management unit, would leave. However sources close to Morgan Stanley said the bankers would work their notice and leave later this month.
Banking sources said the bankers have formed into two groups with plans to start two separate wealth management firms.
Private Wealth Management would be one of the units left under Purcell's control under a plan unveiled yesterday by eight former Morgan Stanley executives known as the "Grumpy Old Men". The eight, who are also shareholers, want to spin off the international securities division "under the leadership of the five widely respected senior executives who were forced to depart".
They estimate the potential value of the institutional securities business at $68bn (€53.3bn), a 26% premium over the current market value. Morgan Stanley has a market capitalisation of $54.7bn.
The spin-off would leave Dean Witter with its investment management business, retail brokerage, mutual funds and the Discover credit card business.
Purcell's leadership has come under fire from former executives including Robert Scott, former president and chief operating officer.
Scott has been proposed by the dissident shareholders as the interim chief executive of the new business with a non-executive chairman to be determined.
Under the shareholders' plan, Joseph Perella, Stephan Newhouse, Terry Meguid, Vikram Pandit and John Havens would all return to take key roles at the securities division.
All five left the bank after Purcell promoted Zoe Cruz, head of fixed income and Stephen Crawford, chief administrative officer, to co-presidents.
Morgan Stanley shares closed down 0.9% at $49.40 in New York last week.