Morgan Stanley boss James Gorman is set to step down within a year

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James Gorman plans to step down as chief executive officer of Morgan Stanley within the next year after more than a decade at the top of the Wall Street bank that has transformed itself into an asset management behemoth.

GormanThe 64-year-old told the bank’s annual meeting of shareholders on Friday that “the specific timing of the CEO transition has not been determined, but it is my and the board’s expectation that it will occur at some point in the next 12 months.”

He added that he expected to become executive chairman “for a period of time” after passing to his successor.

Gorman said Morgan StanleyThe board of directors had “identified three very strong senior internal candidates for consideration as the next chief executive”.

The leading candidates to take on one of Wall Street’s most prized positions are co-chairs Ted Pick and Andy Saperstein, and Dan Simkowitz, head of the investment management unit, said people familiar with the matter. Pick manages Morgan Stanley’s institutional securities business, which houses investment banking and trading, while Saperstein oversees the wealth management division.

“Choosing Andy Saperstein, this is the highest multiple, the most predictable business. By choosing Ted Pick, that’s probably the most complex issue,” said Chris Kotowski, equity analyst at Oppenheimer.

CEO Jonathan Pruzan had been another top contender to take over from Gorman, but he it left earlier this year.

Morgan Stanley shares closed more than 2% down on Friday.

Australian-born Gorman replaced John Mack as chief executive in early 2010, having served as the bank’s co-chairman responsible for global wealth management, investment management and operations. He became president in 2012.

His appointment 13 years ago underscored Morgan Stanley’s intent to expand into wealth management and diversify away from its traditional investment banking and trading businesses.

Gorman has doubled down on asset and wealth management with acquisitions in recent years of ETrade and Eaton Vance.

The bank’s market capitalization tripled under his leadership to about $140 billion, surpassing arch-rival Goldman Sachs along the way.

“He was a phenomenal CEO,” said Christian Bolu, a banking analyst at Autonomous Research. “Where Morgan Stanley was, where they are now, a big chunk of that is the vision of him, the execution.”

However, his tenure has not been without blemish. The bank is under investigation by US authorities for its block trading activity and said yes this month in settlement speeches the case.

Gorman told the shareholders at last year’s investor meeting that he had no immediate plans to step down from the bank.

Along with JPMorgan Chase’s Jamie Dimon and Bank of America’s Brian Moynihan, Gorman is one of a group of Wall Street bank bosses who have in contrast to a broader trend of shorter executive terms in US companies.

During the shareholder meeting, Gorman said Morgan Stanley was “very” isolated from the recent market struggles at several regional US banks.

“We play in the same neighborhood but luckily we have one of the better houses,” Gorman said. “I don’t think it was actually a banking crisis. . . I think there is a crisis between some banks”.