Ted Pick: Well, I’d say that’s a great question. James and I are more — much more similar than not. He brings to the table a positive mojo to the business from the time that he took over CEO when things were in, as you know, a pretty rough shape and for now in his 15th year of leadership as Exec Chair, he brings a positive spirit to every single interaction that we have, whether it’s our operating and management committees, our risk meetings, these calls, client interactions, cultural work with our – with our newbies and folks that are looking to get promoted in the organization. I think that spirit of positivity is something that has been contagious in the organization. It’s something that I’m a big believer in and has worked well inside of the trading businesses inside of investment banking, and I think you can feel it throughout the firm.
So the reaffirmation of our partnership, our core values and this articulation of the integrated firm, which is the next step now because we went from trying to build our way back to generating the kind of enhanced scale and deep remote through these gutsy acquisitions. That brought us to a place now where we can look around and see how we can bring the firm closer together. I think the tone is one of determination. I’ve been at this place for more than three decades, and we had our moment sort of before the [abyss] in ’08 and I think it’s fair to say that the entire senior partnership, James, but also the folks that came through the organization like myself, we are determined to not revisit anything that feels like those days. So the calling card here is durability is consistency.
We want to put up consistent results Part of what you see in the strategic deck in the back page, those are very clear numbers, and we will hit them. We will hit those numbers. It will take time. We will have to do all of the three yards and a cloud of dust work associated with a thoughtfully working our way to those numbers such that when we hit them in a normalized environment, which will be part of the next arrow on Page 3 and the years to come, we will have done so in a way where we can achieve full valuation on it because the view will be that they are not only achieved for a moment in time, but sustainable. And that obviously is also the calling card of James tenure, which is that of consistency and durability. So if the first is this positive mojo and the second is this ethos of consistency, rigor durability I think the third, at the end of the day, has been to believe in what Morgan Stanley can aspire to for clients, and that is this integrated firm that we are something differentiated in our two channels very clear on what we do and what we don’t do, and that the cycle is very much a tailwind for us.
Operator: We’ll move to our next question from Christian Bolu with Autonomous Research. Your line is now open. Please go ahead.
Christian Bolu: Good morning, Ted, and welcome to the call. Good morning, Sharon as well. Maybe Ted, for you, on the trading businesses, Morgan Stanley has suffered some share loss over the last couple of years and your peers have been aggressively allocating capital to that business and gaining share so maybe curious on how you’re thinking about opportunities to grow those businesses and any plans to either invest more capital or resources into that business?
Ted Pick: Thanks for the question. Christian, good to hear your voice. I think we know that we have — we have achieved the top three position in the Institutional Securities business over the last number of years. But as you say on the margin, we have lost share to the number 1 and number 2 and I think our view has been that, that is a trade that we’ve been willing to make both to continue to toggle the organization to the kind of revenue and profitability mix that you see today. But also importantly, the preservation of capital, which allows us today irrespective of where we are in Basel III end game to have a CET1 ratio that is well above 15%. As you’ve heard, I am with the team much focused on the durability of the dividend.
And so there’s been a real focus on what shareholders want and what the business model ought to be for folks that want a durable Morgan Stanley. Now that having been said, what you saw in 2020 was that we can be quite agile about getting capital resourcing to the client base if the tailwinds are there. Part of the proposition of being a global investment bank is that, if, for example, balances start working in the prime brokerage context or is there ’21/’22 highs where we’re about 10% away from those figures, well, then perhaps capital needs to be put towards equities, namely the prime brokerage business on behalf of clients. There may be other periods where the event space, which was an illusion made on the previous question with respect to activity around financial sponsors, that, that activity may come back because, of course, at some point, these large assets need to trade in the sponsor community is dependent at some level on the street to engage in velocity.
So there is no strategic decision at all to withdraw from the investment bank. I think what we would say in 2024 is that it’s not really a choice between wealth and investment management or the insured securities business. We will engage in both activities, but we will not be looking to chase the ball simply to have wallet share. The name of the game is to have an income statement that demonstrate operating leverage in each of the two businesses and ultimately, to get to holistic returns. So we are much focused on what the durability of that capital put uses and where we can serve clients over a long period of time. We’re paying attention to it very, very carefully. And what I’m most excited about, Christian, is that the cycle that’s coming investment banking-led cycle is coming at a time when we spent years putting together, and I know you’ve met some of these folks are so-called integrated investment bank.
