Colm Kelleher wanted to leave Morgan Stanley before the recession hit

As finance chief at Morgan Stanley, Colm Kelleher was in the thick of it when the last economic crisis hit. This time around, the Irishman is watching the impact of the coronavirus pandemic on world markets and economies from the app on his phone and the newspapers he reads daily at his Italian bolthole. 

After stepping down as president of Morgan Stanley last summer, Mr Kelleher remains on the books as a “senior adviser”, keeping a PA, an office and a Bloomberg terminal, but is deliberately hands off as he contemplates how to spend the “final third” of his professional life.

“I’ve taken a year out specifically and I tell people, ‘Please only call me if you really need me’ because I want the new management team to do their own job . . . I don’t want to be like Banquo’s ghost,” says the 63-year-old, who insists he will “stay active” well into his 80s through a combination of non executive roles and pro bono work.

Mr Kelleher joined Morgan Stanley’s London office in 1989 after studying history at Oxford university. He mentions his beginnings as one of nine siblings frequently, crediting it with his down-to-earth outlook. “I never put myself in the newspapers like a lot of these egoists,” he says. “I never confused the job with the status of who I am.”

Within Morgan Stanley, Mr Kelleher was known for his archly raised eyebrow that screamed interest or disbelief, his exhaustive follow-ups that tripped up the most diligent of his subordinates, and a fondness for beginning sentences with, “As you know” before launching into obscure historical and literary references that left colleagues googling under the table. 

He also became known for his unique sense of humour, including locking the doors to meetings as soon as they started to shame latecomers. That mixture of traits, and the deep loyalty of colleagues, served him well, propelling him from the fixed income desk in London to head capital markets in New York, before the CFO’s chair called in 2007.

He later headed the investment bank from London, before rising to president in 2016 after the departure of wealth boss Greg Fleming, who quit and now runs Rockefeller Capital. Reports described a power struggle but Mr Kelleher says there was “no rivalry” between them and they remain friends.

Mr Kelleher says he only seriously considered leaving once. “I almost followed John Mack to Credit Suisse,” he says of his boss’s 2001 move to lead Credit Suisse First Boston. “At the time Morgan Stanley was going through some issues.”

He decided against it because “at the end of the day if you move jobs you become a bit of a professional gunslinger”.

After that, Mr Kelleher saw no reason to leave. “Even in the Purcell [Philip, former chairman and CEO] era, when the firm was going through huge conniptions in 2005, I actually benefited from that because that’s when they brought me to the States to become head of capital markets. So, I never experienced any of that shakeout that some people had.”

Mr Purcell was ousted in 2005 after a string of high-profile departures over his leadership of the bank and replaced by John Mack, whose tenure at Credit Suisse proved shortlived.

Mr Kelleher became Mr Mack’s CFO in 2007. Throughout the crisis and its chaotic aftermath, Mr Kelleher ensured there was enough liquidity to keep Morgan Stanley afloat at a time when rivals were failing, including aggressively running down the bank’s balance sheet and tripling its cash position between the collapse of Bear Stearns and Lehman Brothers. The move was unpopular at the time, a colleague says, but proved decisive in saving Morgan Stanley from the fate of its now defunct onetime rivals.

He was a reassuring voice on quarterly earnings calls, rallied the troops in the trading room and watched his dream of becoming CEO die.

“I would have liked to have been CEO without a doubt,” says Mr Kelleher. “I was lucky in the way I was promoted, and then [in 2009] Gorman [James] became CEO when he was my age.” That closeness in age led to Mr Kelleher’s realisation that, “I wouldn’t be CEO”. It was later reinforced because “James was doing an exceptional job”.

When Mr Kelleher stepped down last summer, Mr Gorman paid a gushing tribute, describing him as the “most important person I have sought advice from”. Mr Kelleher says it was the “perfect partnership”. “We were able to carve the world up,” he says.

“He would rely on me for risk . . . and I would totally rely on him doing the external management of the company, which he is very good at. And we trusted each other.” 

Risk is a critical issue now, as markets swing from record highs to record lows in response to the unprecedented stimulus plan released by the US Federal Reserve and the recession sparked by Covid-19.

Three questions for Colm Kelleher

If you were not a banker, what would you be? 

A professor of Byzantine history if I were clever enough.

Who is your leadership hero?

In history the Emperor Justinian, in my life John Mack for his actions in holding Morgan Stanley together when things got very bleak.

What was the first leadership lesson you learnt?

You can only worry about things you can influence or control.

When we speak in mid-June, Mr Kelleher is among those who think the markets are out of step with reality.

“What the markets are not pricing in is a recession and, as sure as night follows day, there will be a recession,” he says, citing the challenges to globalisation, trade disputes and the massive demand shock.

If he were still in his old seat, he’d keep trading risk low. “The most important thing here is you just have to stay close to shore,” he says, “facilitate where you can, and try and protect the bank. And the good news about Morgan Stanley is that we’re not really a lending bank, we’re not in consumer finance like Goldman. They’re the areas that are going to suffer.”

He invests in exchange traded funds, private equity and other alternative assets, and some unlisted start-ups.

Beyond those personal investments, Mr Kelleher doesn’t really have to worry about the markets and economic mayhem. “I was absolutely convinced we were going to have another recession,” he says of his 2019 decision to step down.

“I did not want to be in Morgan Stanley in a position of seniority with another recession, not because I couldn’t have done it but because I feel I’ve done enough and it’s time to do other things. I wanted to leave with my career at a high, my flags flying, my arms kept (up) as I marched out of the fortress.”

Mr Kelleher joined the board of Norfolk Southern, one of America’s biggest transport companies, last year. Beyond that, the first six months of his post-Morgan Stanley life have been spent with his wife, three children, extended family and friends, and travelling, including raising more than $300,000 for Student Sponsor Partners — a New York-based charity that offers low-income students funding and mentorship — by walking almost 500 miles of Spain’s Camino de Santiago.

He was closing in on his “third chapter” earlier this year. “I had pretty much made my decision that I was going to do something which was very exciting for me,” he says. “Now, I have to wait to see whether that is viable . . . in September or October, because the world is changing.”

The thing that has surprised him most since leaving, he says, is “how well I’ve taken to it”. “I’m not missing my job anywhere near as much as I thought I would,” he says. “In fact I feel really happy not being at work.”