Rich Portogallo, global head of prime brokerage at Morgan Stanley in New York, is to succeed Shel Johnson as head of the US Equity Division at the firm.
Portogallo will retain responsibility for Equity Financing Services (EFS), and assume responsibility for Fixed Income Financing (Repo) and Counterparty Credit Management in addition to his new role as head of the Equity Division.
Johnson, who spent 25 years at Morgan Stanley, is to retire from the firm to pursue a number of external business interests.
The move reflects the important strategic changes being made at Morgan Stanley to deliver the entire firm to clients, across all asset classes. Senior management oversight of the Equity and Fixed Income Divisions was combined last summer, in the sense that Jerker Johansson (head of equity) and Neal Shear (head of fixed income) assumed joint responsibility for running both divisions. Integration will take place at the operational level “where it makes sense,” says a spokeswoman. In other words, these changes do not presage the complete integration of the fixed income, equity and prime brokerage businesses of the firm at the trading, financing, distribution and research levels.
One measure of the challenge the investment bank faces in combining what were traditionally separate businesses is the fact that there will be no reallocation of revenues from the businesses being combined. Overcoming existing remuneration structures within investment banks is famously difficult to do. So the firm is instead emphasising the sales and cost synergies. “We view the leadership changes as essential for us to fully exploit these cross-asset class opportunities,” reads an internal memorandum explaining the changes to staff. “In addition, we expect to manage costs more effectively by eliminating overlapping efforts and streamlining areas such as our technology platforms, where appropriate.”
Stu Bohart, who is currently heading prime brokerage in London, will relocate to New York and become global head of Prime Brokerage, reporting to Portogallo. Jack Inglis and Warren Holmes will succeed him as co-heads of Prime Brokerage in Europe, based in London, and reporting to Bowhart. Stock Lending (run by Martin Tell), Fund Administration (run by Seth Weinstein), Fixed Income Financing (run by Tom Wipf) and Counterparty Credit Management (run by Steve O’Connor) will each all report to Portogallo as well.
Portogallo will report to Jerker Johansson for the Prime Brokerage and Fund Administration businesses, and to Neal Shear and Johannsson jointly for the Stock Lending, Fixed Income Financing and Counterparty Credit Management businesses.
As part of the integration effort, Equity Research and Fixed Income Research are being merged, with Juan-Luis Perez re-locating from London to New York as global head of a combined Research Department. Existing equity research chief head Dennis Shea and his fixed income equivalent, Ryan Marshall, are taking other positions within the firm.
Stefano Corsi will become global head of Distribution for Fixed Income and Equities, reporting to Johanssson and Shear. Matt DeSalvo, head of US Equity Distribution, will report jointly to Corsi and Portogallo as head of US Equities. Richard Heyes, head of European Equity Distribution, will report jointly to Corsi and Derek Bandeen, head of European Equities. Arif Imam, head of Japan Equity Distribution, and Vincent Chui, head of Asia-Pacific Equity Distribution, will report jointly to Stefano and Danny Hegglin, head of Asia Equities. Barry Davis will become global head of SRM across both Fixed Income and Equities, reporting to Corsi. Scott Lenowitz will take on business unit responsibility for client-facing technology across both Fixed Income and Equities, reporting to Corsi. Lenowitz is already in charge of all technology within the Equity Division. David Wong will become global head of Funding for Fixed Income and Equities. Jason Pugh will become global head of Sales and Trading Documentation, reporting to Steve O’Connor and to Mary Ellen Semmelhaack. Dennis Scurletis will become global head of the Equity and Fixed Income Futures business, reporting to Rich Portogallo. Ned Stiker will assume Scurletis’s current role as head of Interest Rate Sales.