Purcell: Bidding adieu

New York, June 13 (Reuters): Morgan Stanley chief executive Philip Purcell on Monday announced plans to retire, yielding to months of pressure from dissident shareholders and a growing exodus of bankers and traders.

Purcell has led Morgan Stanley since the merger of Morgan Stanley with Dean Witter, Discover & Co. in 1997.

His departure came as the US investment bank also warned it expected its second-quarter profit in the current fiscal to fall short of Wall Street forecasts, citing weakened market conditions.

Sixty one-year old Purcell, in a letter to the firm’s employees, said he would retire as soon as a successor was named, but no later than the firm’s next annual meeting in March 2006. Morgan Stanley board has begun a search for a new chairman and chief executive, led by director Chuck Knight.

Tom Neff, chairman of executive search firm Spencer Stuart US, has been hired by the board to find a successor.

“It has become clear to me, 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, that this is the best thing I can do,” Purcell said in the letter.

Analysts and investors applauded the news, driving Morgan Stanley shares up nearly 5 per cent in pre-market trade.

The New York-based firm said it expected to report per share profit about 15 per cent to 20 per cent less than the $1.10 it reported a year earlier. This equates to profit of 88 cents to 94 cents per share.

Last month, Purcell warned investors gathered at a UBS conference that anaemic market conditions would hurt quarterly results.

Representatives of a group of eight former senior Morgan Stanley executives, who have campaigned for nearly three months to drive Purcell out, were not available to comment.