Sir David, now a non-executive deputy chairman of Lloyds, said his decision was entirely based on the attractions of a fully executive role in an investment bank and had nothing to do with the planning for the top job at Lloyds.
But his decision not to wait to see what the Lloyds board does about the job is bound to renew questions about the succession at the clearer. The key figure, Sir Brian Pitman, the chief executive, is 63 and the board recently extended his term of office to the end of 1996, four months before the last date for retirement by the present chairman, Sir Robin Ibbs.
One theory is that Sir Brian himself will step into the chairmanship once a new chief executive has been found. But first he will see through the integration of Cheltenham & Gloucester building society into Lloyds Bank, assuming its members approve the takeover.
Sir David said: 'As time has gone on I have realised that as deputy chairman or chairman the role I would have here is less executive than the hugely executive role being offered to me at Morgan Stanley. At the age of 54 to find an executive challenge on this scale is irresistible.'
Morgan Stanley is one of several formidable American investment banks that have made the City their European base, and they have become famous for the high salaries they pay their top people. Sir David is likely to be paid a multiple of his Lloyds salary.
But he refused to discuss his pay in his new job, saying: 'It is nice to be well remunerated but remuneration played absolutely no part in my decision at all - what interested me was this job.'
Part of his earnings will be in shares of Morgan Stanley, which is 50 per cent owned by its staff and pays a proportion of their bonuses every year in equity.
Sir David is to head a three-man executive team at Morgan Stanley's European offices. The other members are the present pair of chief executives, Steven Ward, 43, an Englishman whose main speciality is the bond markets, and Stephen Waters, 46, an American investment banker and corporate financier.
Sir David will also be a managing director of Morgan Stanley and a director on the group board. The London operations employ 2,300 and are an important profit centre for the group. They also control its business in Europe, Russia, Turkey and South Africa.
Sir David was chairman of the Securities and Investments Board from 1988 to 1992. Before that he had a long spell at the Bank of England, including six years as an executive director.
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