Morgan Stanley chief faces fresh salvo

Eight former senior bankers from Morgan Stanley stepped up their campaign yesterday to oust the investment bank's chief, Philip Purcell, taking out an advertisement outlining alleged blunders they claim he made.

Eight former senior bankers from Morgan Stanley stepped up their campaign yesterday to oust the investment bank's chief, Philip Purcell, taking out an advertisement outlining alleged blunders they claim he made.

In the latest salvo in the extraordinary battle at the bank, the group claimed Mr Purcell was an "ineffective CEO" who has driven down Morgan Stanley's share price compared with its peers, blemished its record with regulators and forced out talented people who had criticised the current regime.

The group, which includes Morgan Stanley's former chairman Parker Gilbert and ex-president Robert Scott, first wrote privately to Morgan Stanley's board on 3 March detailing their complaints. They made their campaign public after Mr Purcell replaced the bank's president, Stephan Newhouse, with the head of fixed income, Zöe Cruz, and the chief risk officer, Stephen Crawford, this week.

The move led to the departure of several high-profile employees, including Vikram Pandit, who oversaw Ms Cruz as head of trading and investment banking, and John Havens, his deputy in equities.

In their latest letter, published yesterday in a full-page advertisement in The Wall Street Journal, the eight said: "The loss of several key executives who were very important contributors to the success of the highly profitable institutional securities business - because they were unwilling to swear loyalty to an ineffective CEO - is an outrage".

Those loyal to Mr Purcell say he was right to get rid of Mr Pandit because he was being groomed by the rebel group to mount a challenge for Mr Purcell's job.

Allies of Mr Purcell also attempted to shore up support this week by producing a letter of 11 March from five executives at Dean Witter, which Morgan Stanley merged with in 1997, supporting the current management. Mr Purcell used to be chief executive of Dean Witter.

The eight former Morgan Stanley executives, who together own more than 11 million shares in the bank, are being advised by Robert Greenhill, another veteran of the bank who runs his own New York advisory firm, Greenhill & Co.

Mr Greenhill's involvement has heightened speculation that the damaging battle over control of Morgan Stanley could lead to its sale, either as a whole business or in parts.

That is not actually the group's desired option. They are pressing for a meeting with Morgan Stanley's directors, in the hope of pushing for a swift replacement of Mr Purcell and the reinstatement of Mr Pandit and his colleagues.