Morgan Stanley launches program to boost diversity in trading unit

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LONDON: Morgan Stanley is piloting a program to recruit Black talent in its capital markets division, executives told Reuters, in corporate America’s latest initiative to improve diversity after months of nationwide protests against racial inequality.
The Morgan Stanley Experienced Professional Program within its Fixed Income & Business Resource Management Divisions is seeking Black professionals with at least two years’ full-time work experience in any field who want to work in finance.
“As long as you have the skill set around communication, analytical abilities, interpersonal skills, and you are willing to work hard, you could have a strong career,” said Derek Melvin, a managing director who designed the program. The banking industry has been scrutinized for its lack of racial diversity since the May death in police custody of George Floyd, a Black man, sparked demonstrations and prompted deep introspection at companies across the country.
That has led to fresh pledges to improve diversity and tie executive compensation to meeting related targets. However, such action has triggered concern from authorities.
Last week, Wells Fargo & Co defended its diversity initiatives after the U.S. Labor Department questioned whether they were unlawful or discriminatory.
Morgan Stanley’s program is only open for up to 20 people, but if successful Melvin said he hopes it will be replicated across the firm’s institutional securities business.
Successful applicants will get one month’s training before doing 10-week rotations on different trading desks, leading to a full-time job.
Feedback on the program so far has been overwhelming, Melvin said. Since advertising it at the end of September, his team has received over 700 applications. Successful applicants will be chosen by the end of the year.
“Our expectations were that after a month, we’d have about 100 to work through,” Melvin said in an interview. “But we’ve been surprised to the upside here.” Earlier, Morgan Stanley MS.N eased past Wall Street estimates for profit on Thursday, wrapping up mixed third-quarter earnings for big U.S. banks that saw those focused on trading clocking big gains while retail banks took a hit from the pandemic.
Wall Street trading powerhouses Morgan Stanley and Goldman Sachs capitalized on a flurry of activity in financial markets as clients bought and sold stocks in response to the coronavirus pandemic while many companies went public or raised fresh capital. In contrast, banks with retail focus like Citigroup C.N and Bank of America BAC.N struggled due to historically low interest rates, provisions to cover bad loans and lower consumer spending. While Morgan Stanley’s trading unit did not hit the record highs of the previous quarter, the latest performance was still good enough to help the bank handily beat expectations.
Revenue from Morgan Stanley’s institutional securities division, which is the bank’s largest breadwinner and houses its investment banking and trading businesses, rose 21% to $6.06 billion.
Equities underwriting revenue more than doubled due to handsome fees from a number of high-profile initial public offerings such as Snowflake Inc SNOW.N, Royalty Pharma RPRX.O, KE Holdings Inc BEKE.N and Warner Music WMG.O.
But revenue from underwriting bonds dropped from last year due to declines in loan issuances and muted dealmaking activity.
“Big investment banks are the easiest financial stocks to own because they have comparatively small loan portfolios (which are the biggest risk) but have upside earnings leverage to the currently active capital markets. Like GS yesterday, today’s MS print proves out that thesis,” said Oppenheimer analyst Chris Kotowski.
Net income applicable to common shareholders rose to $2.60 billion in the quarter ended Sept. 30, from $2.06 billion a year ago. Earnings per share rose to $1.66 from $1.27 a year ago.