Byzantine History
For Morgan Stanley to compete effectively against rivals with larger balance sheets such as JPMorgan Chase & Co, Kelleher will need to encourage more cross-selling between its investment banking and wealth management arms, as well as between banking and trading teams. For example, bankers could encourage their corporate clients to originate trades and hedges with their counterparts in the sales and trading business. He is well versed in such collaborative initiatives. When he was running investment banking and trading, Kelleher helped create a group of senior executives whose job it was to persuade the firm's biggest clients, from companies to hedge funds, to use as many of the bank's products as possible.
More recently, he has moved senior equities executives into bond trading, including naming former equities trading head Sam Kellie-Smith as the new head of fixed income in January.
Kelleher has also started rewarding employees who drum up business for other divisions. Investment bankers who, for example, introduce an executive whose company is about to go public to wealth management brokers get a bump in their compensation.
It's all a far cry from the career Kelleher once considered. A history graduate from Oxford University, he told the Wall Street Journal in 2012 that had he taken a different path, he would have become a professor, lecturing university students on Byzantine history.
Born in Ireland to a family of nine children but raised largely in England, where he is big fan of the Chelsea soccer team, Kelleher likes to pepper business discussions with references to historical and literary figures such as King Canute and Edgar Allen Poe.
When Morgan Stanley was threatened with a three-notch downgrade to its credit rating in 2012, which would have led to a big increase in its borrowing costs and may have prompted big clients to pull back from some business, he gathered his team for a pep talk.
"He talked about the house of Morgan and where the firm came from and what its values are that make it unique," said Lucas Detor, a former co-head of Morgan Stanley's distressed and U.S. leveraged loan business and now an executive managing director for investment manager CarVal Investors.
"He told people, 'I got it. We’ve come from tough places before.' And he was right." Morgan Stanley escaped with a two-notch downgrade, which was a blow but not a critical one. Despite his steely reputation, Kelleher doesn't take himself too seriously. At Morgan Stanley's 2005 Christmas party for the fixed income team in London, a credit salesman dressed in hot pants and a skintight vest as part of a skit to roast Kelleher, then the region's head of bond trading. Darragh McCarthy's lampoon of Kelleher as a satirical gay character in the popular British television series Little Britain had some colleagues wondering if his career at the bank was over but his boss saw the joke.
McCarthy was promoted soon after.