Morgan Stanley deflected a blow to a unit that advises banks by promoting Kevin Ryan, one of the group’s leaders, after Goldman Sachs Group Inc. (GS) tried to recruit him, said two people with knowledge of the matter.
Ryan, 40, who previously ran a team that advised lenders on capital structure and regulatory issues, will co-lead a new unit that also will underwrite stock and debt for banks. He’ll run the group in the Americas with Taylor Wright, while Shyam Parekh heads it in Europe, according to an internal memo obtained by Bloomberg News. Pen Pendleton, a Morgan Stanley spokesman, confirmed the memo’s contents and declined further comment.
European lenders may need to sell stock, bonds and assets to raise some of what Austrian Finance Minister Maria Fekter said last week is 100 billion euros ($139 billion) in necessary additional capital amid the region’s debt crisis. New York-based Morgan Stanley (MS) is the second-ranked equity underwriter and sixth-ranked debt underwriter so far this year, data compiled by Bloomberg show.
“Given what’s happening in Europe, similar to what happened here in 2008, you get a restructuring of the financial institutions landscape,” Raj Dhanda, head of global capital markets at Morgan Stanley, said in an interview.
Michael DuVally, a spokesman for New York-based Goldman Sachs, declined to comment on talks with Ryan.
Ryan previously ran the FIG Solutions team, with FIG standing for financial institutions group. He worked under Wylie Collins, who heads the client-solutions business in the Americas. Wright led the FIG equity-underwriting unit under John Moore and Paul Donahue, co-heads of equity capital markets. Bryan Jennings and Paul Spivack oversee debt capital markets in the Americas.
Claus Skrumsager and Leo Civitillo also will take on additional responsibilities as global co-heads of debt derivatives, according to the memo. Skrumsager, based in London, was hired by Morgan Stanley from HSBC Holdings Plc (HSBA) in 2007. Civitillo joined the firm in 2004 from JPMorgan Chase & Co. (JPM), according to Financial Industry Regulatory Authority records.
The moves “will enhance our ability to consistently create and execute integrated solutions that are so important to our FIG clients globally, particularly as they navigate current market volatility and increased regulatory pressures,” Dhanda wrote in the memo.
Current managers will handle this year’s compensation decisions and the reporting lines will be set in 2012, with the group still accountable to heads of equity and debt capital markets and leveraged finance, Dhanda said. The unit’s headcount isn’t set, and the firm doesn’t plan to create similar groups for other industries, he said.
State Street Offering
Banks and diversified financial companies accounted for more than half of global corporate bond offerings last year, Bloomberg data show. U.S. banks are redeeming trust-preferred securities, a type of junior debt also known as hybrid capital, as last year’s Dodd-Frank financial overhaul prevents them from counting the securities as regulatory capital starting in 2013.
Ryan, who earned a law degree from the University of Virginia, co-wrote a 2007 article on the benefits of hybrid capital, according to the firm’s website. He advised on a deal last year in which State Street Corp. sold $11 billion in mortgage-backed securities and other assets to boost capital ratios, according to one of the people, who declined to be identified because his move isn’t public. Ryan didn’t return a call for comment.
The bidding for talent comes as banks are cutting compensation costs amid a decline in trading and investment- banking revenue. Goldman Sachs and Morgan Stanley’s investment bank each cut third-quarter pay expenses by more than 30 percent from the second quarter.
The firm “is ensuring that we can appropriately compensate those who are delivering returns for the franchise, while balancing what we need to do to deliver returns for shareholders,” Chief Financial Officer Ruth Porat said last week on a conference call with analysts.
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