As part of a senior management reshuffle at Morgan Stanley, Gokul Laroia will take over as head of equities for Asia, while Kate Richdale becomes the sole head of Asia-Pacific investment banking. Laroia and Richdale have been co-heads of investment banking in the region since June 2009.
But the changes, which were announced internally in New York on Monday, span more than this region and Laroia’s promotion is a direct result of the current head of Asia equities, David Russell, returning to London to become head of equities for Europe, the Middle East and Africa (Emea).
Russell will replace Luc Francois who has had a dual role as head of Emea equities and global head of equity derivatives. Francois will now step away from equities and concentrate exclusively on the build-out of the derivatives business, which, according to the announcement, is “a key strategic focus” for the firm. He will also remain on the firm’s management committee.
James Gorman, Morgan Stanley’s chief executive, has said that he wants to increase the bank’s market share in equity derivatives.
At first glance, Laroia’s appointment is a bit surprising — he has no experience in sales and trading, having spent most of his time with Morgan Stanley in the capital markets and investment banking divisions. However, bankers note that a significant portion of sales-and-trading revenue comes from new equity issuance. For example, the sales-and-trading desk gets involved in all the ECM risk business — block trades for instance — as well as in the distribution of IPOs. This means Laroia’s extensive client contacts will still be put to good use and insiders at the bank say they still expect him to play a role in pitches.
Also, a number of sources said Laroia was the most logical candidate for the top equities job in light of Russell’s return to Europe. One banker said the promotion reflects Laroia’s reputation as a bit of a star in the region and suggests that he is being groomed for a bigger role in Asia — having direct experience from various parts of the bank will clearly be advantageous for future job discussions. Notably, Morgan Stanley’s global head of equities, Ted Pick, also has a background in capital markets.
Laroia told FinanceAsia yesterday that he is excited about the new job, including the fact that he will now get to cover Japan as well (according to Morgan Stanley, Asia includes both Japan and Australia, while Asia-Pacific includes Australia, but not Japan).
With the investment banking business now in good shape, he added, the opportunity comes at the right time. Specifically, the Indian business has made significant progress since Morgan Stanley dissolved its investment banking joint venture with JM Financial in 2007 and, earlier this year, got the go-ahead to set up a securities joint venture in China with Huaxin Securities — something it has been coveting for quite a few years.
Laroia has been with Morgan Stanley for more than 15 years and was head of global capital markets, which includes both debt and equity origination, before he and Richdale became co-heads of investment banking for Asia-Pacific after Matthew Ginsburg’s move to Barclays Capital. He was promoted to head of GCM in November 2004 after just two years as head of M&A for Asia. Prior to that, he was a banker in the firm’s telecoms team.
Interestingly, Morgan Stanley has not appointed a new co-head to replace Laroia, choosing instead to give Richdale sole responsibility for the investment banking business. This backtracks on the talk during the past 18 months that the business and the region is too big for one person to run and that having two co-heads with different, but complementing, backgrounds and leadership styles made the business stronger. Now, a Morgan Stanley source says the deep bench within the investment banking business means there is broad leadership already, with most division heads having five or 10 years’ experience at the bank.
Richdale has been with the firm for 10 years. Immediately before becoming co-head of investment banking she was CEO for Southeast Asia, a position she assumed in November 2008. Before that she ran the general industries group in Hong Kong.
Meanwhile, Russell joined Morgan Stanley in 1990 as a European equity trader. He became a managing director in 1998 and by the time he transferred to Hong Kong in 2008, he had advanced to head of equity trading in Europe across all products.
The appointments are effective immediately, but in practice it will probably take a couple of weeks for the various parties to assume their new responsibilities — especially for Russell as he relocates to London.
Laroia, Russell and Francois will all report to Ted Pick, the global head of equities. As part of the management changes, Pick will also assume direct responsibility for global research. Richdale will continue to report to Paul Taubman, Morgan Stanley’s New York-based head of global investment banking.