Morgan strife deepens as boss walks

GIANT US investment bank Morgan Stanley was thrown into new turmoil today after announcing the departure of its chairman and chief executive.

The group immediately denied that Philip Purcell, 61, had been fired by the board after months of civil war. It insisted that he had decided to retire. In a letter to staff, Purcell said he was quitting because of the firestorm that has continued to rage over his leadership.

However, the letter indicated the suddenness of the decision to let Purcell go by admitting that no successor has been put in place.

Purcell wrote: 'It has become clear that in light of the continuing personal attacks on me and the unprecedented level of negative attention our firm - and each of you - has had to endure, this is the best thing I can do for you, our clients and our shareholders.

'I feel strongly that the attacks are unjustified, but unfortunately they show no signs of abating.'

The letter made no mention of the eight former executives who have marshalled the war against Purcell, calling for him to be replaced by former president Bob Scott.

Neither did it allude to the slew of senior executives - some of Morgan Stanley's biggest talents and highest-paid rainmakers - that has quit the firm in recent months, either by the hand of Purcell himself or via defections to rivals.

Last week saw the latest high-profile defection, that of nine senior executives-from the equity derivatives division-headed by Richard Sandulli and Richard Silva.

The division had been identified by Purcell as one of Morgan Stanley's key strengths with significant market share.

Brushing off the disintegration of Morgan Stanley's credibility under his leadership and the firm's falling share price, Purcell signed off his letter to staff by saying: 'It has been said that the true test of a leader is the performance of the institution he leaves behind. On that score I feel my legacy is in good hands.'

His departure comes two months after his latest purge and shake-up of the company's management, after which he claimed he had vanquished his detractors led by the cabal of former directors who styled themselves the Grumpy Old Men and who had upped the profile of their beefs by waging war via the newspapers.

Wall Street traders today delivered their own verdict on Purcell's departure, lifting Morgan Stanley shares by 5% despite news that the company's earnings this year are expected to be as much as 20% lower than last.

In the high-testosterone arena of Wall Street banking, Purcell has long been derided as one of the least popular of leaders.

He took a master's degree in economics at the London School of Economics in the 1960s before becoming, at 32, the youngest-ever managing director at elite management consultancy McKinsey. He is the father of seven sons.