Morgan Stanley climbs on bid talk

SPECULATION is mounting that the management troubles at Morgan Stanley could prompt a rival bank to mount a bid for the US$60bn (£31.7bn) group.

Shares in the Wall Street company climbed 3% yesterday even as the turmoil at the lender intensified, with HSBC in the frame as one possible suitor.

Morgan Stanley has been rocked this week by senior-level management changes, high-profile resignations, and a remarkable guerrilla campaign against the chief executive, Philip Purcell, by a group of former directors.

The former directors are publicly calling for the board to kick out Purcell, saying he has mismanaged the company over recent years since its merger with Dean Witter Discover.

The dissidents have even taken out full-page advertisements in one American newspaper to broadcast their dissatisfaction with both Purcell and Morgan Stanley's performance.

The former directors said: 'Unless immediate action is taken to reverse the loss of talent, the firm's ability to restore its reputation and its competitive edge will be put at risk.'

Analysts reckon that few groups would have the firepower to make an offer for Morgan Stanley, which may be solicited by its board. They name HSBC, General Electric and Bank of America as possible bidders.