![]() They were, perhaps, not predisposed towards a brokerage business that reminded them every day of Dean Witter. They had earlier been the victims of the Morgan Stanley Dean Witter in-fighting under then CEO Philip Purcell and had left the firm angry at their treatment. The two leaders of Citi, CEO Vikram Pandit and president John Havens, were ex-Morgan Stanley investment bankers. Not only that, but the Smith Barney division had its own problems. Citi found itself to be one of the first and most badly wounded of the big global banks. I knew if we had 15,000 brokers with $2 trillion in assets, then we would always have the foundation of a stable businessĮvents in 2008 changed all of that. They never for a moment thought that buying Smith Barney would be an option. ![]() Before the financial crisis, they worried that Citi would strike a killer blow in wealth management by making a play for UBS. Since Gorman had joined Morgan Stanley from Merrill Lynch in 2006 to run the rump of the Dean Witter brokerage that had caused so much management turmoil at the firm, he and then CEO John Mack knew they had two options in wealth management: to get the business into shape and sell it or to double up through an acquisition.įor some time, Gorman admits, he and Mack thought that the first option would be the most likely. At the time, and for some time afterwards, a big bet on wealth management seemed an unlikely path to success for the firm. Now, the price that Morgan Stanley paid Citi looks like a steal. The acquisition of the Smith Barney brokerage business from Citigroup is hailed as one of the transformational moments in Morgan Stanley’s reinvention.
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