Two senior bankers at Morgan Stanley resigned on Wednesday, shaking the firm’s prized investment banking division and casting doubt on the ability of Philip J. Purcell to gain control of his divided firm.Ten senior bankers and traders have left the firm in recent weeks. If the exodus of talent — the lifeblood of any Wall Street firm — continues, the pressure on Morgan Stanley’s board to remove Purcell as CEO will intensify. One large institutional shareholder of Morgan Stanley, who declined to be identified because of the institution’s policy, said on Wednesday that the departures had increased the likelihood that this person would lobby the board for the ouster of Purcell. Joseph R. Perella and Tarek F. Abdel-Meguid, two long-time and well-regarded bankers, resigned on Wednesday. The firm named two respected but not widely known bankers to replace Meguid as head of investment banking. The departures of Perella and Meguid are, in some ways, the most damaging yet for Morgan Stanley. Two weeks ago, both agreed to stay after Purcell named new co-presidents in response to a call for his resignation. Perella was given a new title of vice chairman.That the two executives chose to leave soon afterward suggests that Purcell has yet to win over his fractious investment bankers, who contribute 60 per cent of the firm’s profits and who constitute the core of the Morgan Stanley that merged with Dean Witter in 1997. More important, their departures raise the question as to whether the vaunted Morgan Stanley name, a tie that has bound generations of Wall Street’s best bankers to the firm, still carries its magic as long as Purcell remains at the helm. ‘‘Morgan Stanley is a premier firm with a great brand,’’ said Richard Barrett, a former senior banker at Credit Suisse First Boston. ‘‘Now it has joined the ranks of the mortals. With people leaving, you create a vicious circle, ultimately losing control of your clients. The revenue stream is downgraded, there is pressure on margins and tensions increase internally.’’The larger point for Purcell is not so much whether he is able to keep his investment bankers, but how he is going to attract the type of talent he needs to produce revenue growth in crucial areas like trading and retail brokerage, given the relentless turmoil.While Morgan Stanley’s investment bankers, personified by Perella, are world class, its trading operations — the growth engine for Wall Street firms these days — have had a spotty performance. —NYT
