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FBN’s Charlie Gasparino with Morgan Stanley CEO James Gorman on the firm’s solid quarter, plus its inability to deliver on promises of brokerage p...
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Improvements in the bank's wealth management senior business correspondent Charlie Gasparino is going right now but Morgan Stanley CEO James Gorman Charley thank you.
In thank you Jim for -- James to show enough of -- have been right straight right off the bat.
Six months ago someone you firm wanted to kill me.
You don't want to -- correct.
Sell though on a K the other intimidated them.
Well I don't I don't blame if they did just just so you know given my my reputation with fewer people but it's that thank you for coming year -- your guns that the door and congratulations on a good quarter I do wanna ask you about that quarter but then I want to -- this a little -- forward for shareholders to know what's coming in the future.
Our first good quarter.
Lost but because of accounting charge -- correct and explain that a little bit.
Christmas list and I have to say it's great to be hero is so if you ask me nicely I'd turn up and that's what happened but it is too nice that he's asking us and it's like that's what we're doing this I appreciated quote the quote it was a really good -- That yes there is an accounting loss relating to with the debt that we haven't you make -- value adjustment -- market.
And that's an accounting thing the washes out in the long run so right.
On an operating basis the -- does avenue on sense investments which I think we're 42 and eight point nine billion dollars of revenue really.
Solid across all businesses OK so good quarter and bomb.
Let me just ask you this going forward.
The reason -- a lot of analysts like Jamie Dimon the CEO of JPMorgan Chase is because.
He under promises and over delivers.
Don't you kind of fit in the -- opposite category particularly when it comes to your baby the brokerage business which you believe.
Is the future the firm 20000 brokers and a wealth management powerhouse.
You basically said he took over back in 2010 you would have.
Pretty solid pretax margins -- of 20%.
Obviously hasn't achieved at certain way may -- below low teens if that you know you also say that about a billion dollars of -- savings which where -- we on that.
Yeah I think listen guilty as charged we -- com we have a promised someone think.
And we didn't anticipate three years of zero interest rates -- ending many people did or -- have a lot of wealthy investors out there.
We -- -- -- -- the kind of equity markets we've been in but what we didn't have a promise on.
Was the importance of integrating these businesses.
We're live from weeks away -- from being done three years relive -- weeks away from this thing being done.
This will be the largest wealth manager in the world so yes we got ahead of ourselves somewhere in the margins would be -- clearly -- they haven't happened.
But we didn't get ahead -- -- on the attractiveness of the business and how would look once we integrated the -- But the cost savings that is something that's total savings are right on track we're we're we're right about your ability ride on the Bob okay.
Do you think it hurts you with investors when you over -- like that I mean you know one of the things when I talk to people value.
Smart operation guy steady hand -- ladies there.
But we still worried about the business model the stock is off something like 30% over the here obviously that's not -- your -- you Europe be of a lot of stuff going around.
But does that hurt you with your view credibility when you when you went over promise like that.
I don't know you have -- us investors that's one aspect of many things economy and look at.
Look at what we've done with the balance sheet we've brought it down we -- retreat the balance sheet what do we do we brought it down from one point two trillion to 800 billion.
What do we do of that capital we -- to increase our capital we -- -- Mitsubishi raise that capital sixty billion.
What do we do with the liquidity we -- -- -- could be against -- 180 billion what do we do with fixed income sales and trading we say it would expand our footprint.
What happened we just had a 2.5 billion dollar Puerto what do we do with and I can -- reports say yes.
Guilty his -- one thing we have a promise haven't delivered we will get there I think investors frankly look at the complexity of all the things that you talk about right.
And how you them perform.
I think now management same -- has delivered.
On nine of the ten things that we said we deliver -- you convinced investors and analysts of that have you made the case about your business model.
Oh I think the investors a command some of the market place of the -- is a very difficult mightily.
And you've got to remember it was only 34 years ago -- in the biggest financial crisis of the last seven years.
And it's not just a Morgan Stanley it's all of activated as a one name them right and you didn't create -- stocks are you gonna create dot I understand I mean I'm not gonna blame you for everything but you know it is an interest in -- when -- -- to investors.
The only thing I took invests about is you are integrating the brokerage force of Smith -- this is -- do that you cut.
-- in a financial crisis Citigroup want to unload this if they unloaded in pieces you have the option to buy what 14% to -- and in many which should get we get you over -- own about 65 OK but it's a six that you'll still be controlling it.
-- question is do you wanna buy it all I know -- been asked this question today.
A problem with and you said I've heard your other your other ranches well we don't have to do it but apparently is to personally James Gorman.
This change former wanna on this -- -- But some of the bill put James going once it's got to do with what's in the right interest of our shareholders -- -- to take you -- go out of it.
We like that business that's why we doubled up that's why we did the deal in January of 2000 elements Citigroup we like the business we think we go to -- -- -- -- -- comment about about stumping meant a fair the -- is a bit.
The assets -- there.
The financial advisors today we like the business -- we have a very clear timeframe.
Next month Ford -- percent a year from then 610% a year after that 20%.
So what I citi's we will follow that timeframe so you're not gonna -- the plan where are we always happy to listen.
If somebody wanted to accelerate that but we -- no components you're not -- -- initiate those talks if they come to you.
Is what you're saying you're ready to the only hope we will initiate is to exercise I call -- might that he -- you will not -- Vikram Pandit.
He's got to ask you not I just said the only exercise will make is the --
