By Justin Baer
In picking his next finance chief, Morgan Stanley Chief
Executive James Gorman once again went with a candidate who had
spent a lot more time advising other bank CEOs than counseling
him.
With current finance chief Ruth Porat announcing Tuesday that
she was leaving for Google Inc., Mr. Gorman selected as her
successor Jonathan Pruzan, a 46-year-old investment banker who once
reported to Ms. Porat and later co-led the team that advises banks
and other financial-services companies.
Mr. Pruzan "understands the current regulatory environment,
having shepherded clients" through the Federal Reserve's annual
"stress tests," a key event for large banks, Mr. Gorman wrote of
Mr. Pruzan in a memo to employees Tuesday. "He brings both great
technical skill and proven leadership to this new role."
Mr. Pruzan follows in his old boss's footsteps to take a major
role as Morgan Stanley transitions from the shaky ground that it
tread on following the financial crisis to the more stable footing
in which it now focuses on increasing revenue and returns and
keeping costs under control.
As a banker to other bankers, Mr. Pruzan has spent much of his
career counseling peers and rivals on many of the thorny issues he
will confront as Morgan Stanley finance chief. Those include
weighing when to raise or return capital, expand or shrink its
balance sheet and take a large role managing the firm's
relationships with banking regulators at the Federal Reserve.
"He's perfectly suited as today's CFO," said U.S. Bancorp Chief
Executive Richard Davis, who has known Mr. Pruzan for more than a
decade. "In the old days, the CFO was more of a clinician who
worked on the numbers. But now financial-services firms have to
work on the stress tests, and handle the diplomacy that goes with
working with the ratings agencies, the analysts, the shareholders
and all the constituencies who have to meet with him."
Mr. Davis said Mr. Pruzan had advised his bank on several
acquisitions over the years and was brought in to help explain
strategic moves to his board.
Mr. Gorman contacted Morgan Stanley board members twice in the
past 10 days or so to keep them abreast of Ms. Porat's discussions
with Google and plans to promote Mr. Pruzan, people familiar with
the matter said. On the second communication, Mr. Gorman told them
the departure was sealed, a decision that wasn't surprising to some
since Ms. Porat had also recently considered leaving to take a
senior role at the U.S. Treasury.
Mr. Pruzan, who joined Morgan Stanley in 1994 from PaineWebber
& Co., has spent more than 20 years advising financial-services
companies. Mr. Pruzan started his banking career in 1990 after
graduating from Tufts University. He has two other brothers who
have worked in financial services.
Mr. Pruzan worked under Ms. Porat before Mr. Gorman tapped her
in late 2009 to become the firm's finance chief. Before taking his
current position, Mr. Pruzan was the co-head of the M&A group
advising North American financial institutions. In that role, Mr.
Pruzan was part of the team that advised General Motors Co. on its
restructuring.
In recent years, Mr. Pruzan headed an internal committee focused
on improving the working conditions of its youngest bankers, a hot
topic at investment banks after the financial crisis pounded Wall
Street's reputation.
It will take time for Mr. Pruzan to win credibility with
investors, analysts, regulators--and the senior management team
that, along with Ms. Porat, set Morgan Stanley on its new path in
the wake of the crisis, said Brad Hintz, a onetime Morgan Stanley
treasurer who later covered the securities industry as a research
analyst and now serves as an adjunct professor at New York
University.
"But it's the strategy that's been put in place," said Mr.
Hintz. "Her loss won't change that strategy."
Maureen Farrell contributed to this article.
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