It is going to be a tough* Christmas at Morgan Stanley October 4, 2012 at 10:36 pm

MS CEO James Gorman said in an interview with the FT:

“There’s way too much capacity and compensation is way too high”… “As a shareholder I’m sort of sympathetic to the shareholder view that the industry is still overpaid.”

Bloomberg describes the problem nicely in an article entitled No Joy on Wall Street as Biggest Banks Earn $63 Billion: it’s not that banks are not making money, it is that their ROEs suck. That means

We may be on the verge of a new kind of banking crisis, and that’s a banking crisis where no one wants to own any banks as an investor

As John Garvey from PWC told Bloomberg. Gorman meanwhile is asking himself if MS can get back to a 10 per cent ROE. You can see why no one wants to own bank stock…

*Of course, by tough I mean Porsche Boxster (ick) tough, not Volkswagen Up tough.

One Response to “It is going to be a tough* Christmas at Morgan Stanley”

  1. […] It is thinking like this that is (for better or worse) creating the ROE problem we discussed this morning. […]