John Mack returns to head Morgan Stanley

John Mack on Thursday received a rapturous reception from Morgan Stanley staff after being named chairman and chief executive of the Wall Street bank.

Employees in New York gave Mr Mack a standing ovation after a speech in which he promised to restore morale at the bank which has been roiled by three months of in-fighting over the leadership of Philip Purcell.

Miles Marsh, the group’s lead director, offered “deep appreciation” to Mr Purcell who announced two weeks ago he would step down as soon as a successor was found. But the tribute paid to Mr Purcell was met with silence from the more than 100 employees present.

In reponse to the thunderous applause for Mr Mack, Mr Marsh said: "I think we made the right decision."

The board agreed unanimously that Mr Mack was “uniquely qualified” for the job. “He has the singular combination of experience, strategic insight and leadership ability needed to bring together the people of Morgan Stanley and improve profitability,” Mr Marsh said.

Mr Mack said later he was “very excited” to be back at the bank, which he said had a “great franchise”.

“There’s nothing like coming home,” Mr Mack said on CNBC television. On the tasks ahead, he said the bank had to “make sure we are bringing talented people here and keeping them”. The banks also needed to ensure its relations with regulators were the best they could be. “There’s a lot to do,” he said.

Mr Mack, who left Morgan Stanley four years ago after losing a power struggle with Mr Purcell, said his homecoming was emotional. He said he was looking forward to working with colleagues old and new and was eager “to hear and execute their ideas”.

He did not name a management team but outlined four priorities for Morgan Stanley: to ensure the right people were in place and that everyone was working together as a team; to enhance profitability in the face of intense global competition; to get employees to focus "relentlessly" on clients; and to have productive relationships with regulators.

Charles Knight, the independent director in charge of the search committee, said the board, which had initially ruled Mr Mack out as a candidate, conducted a thorough search process and evaluated a number of outstanding candidates. In the end it determined Mr Mack's achievement in the financial services industry, his ability to attract and retain talent, and his strong ties to Morgan Stanley made him the best candidate. Its vote was unanimous.

The group of eight retired executives who led the campaign to oust Mr Purcell said Mr Mack's appointment was another important step in the process of restoring Morgan Stanley to preeminence in the financial services industry

“We hope that John will be able to attract back many of the talented employees who left the firm during this stressful period, in particular the five former members of the management committee who are so important to the firm's franchise,” they said.

Mr Mack said that he could bring some of the five men back.