Morgan Stanley is bulking up its public finance division, looking to boost its market share, and positioning itself for rebounds in certain neglected sectors.
The New York-based bank unveiled 10 new hires in its municipal unit, the most prominent of whom is Scott Richbourg.
Richbourg, who for the last nine years ran the public finance business at Financial Security Assurance, was previously an investment banker at Goldman, Sachs & Co. and UBS.
He left FSA after the bond insurer's merger with Assured Guaranty.
Morgan hired Richbourg to run the company's Southeast region group, out of Orlando, Fla.
Stratford Shields, head of Morgan's public finance unit, said in an interview yesterday that in 2009 the division decided to drive for more business.
Morgan's market share of negotiated municipal deals leaped to 9.3% last year from 6.2% in 2007 and 4.5% in 2006, according to Thomson Reuters.
Shields said the firm's objective is to achieve a sustainable market share of 10% to 12%.
So far this year, its market share of negotiated deals is 10.2%.
The division now has 95 bankers, compared with 89 two years ago, according to Shields.
"We think this is a very solid business for Morgan Stanley going forward," he said. "It's a very profitable business."
Another key hire was Robert Foggio, who used to head the housing bond group at Goldman Sachs.
Hiring a housing banker may seem odd during a year when housing bonds compose 1.6% of municipal issuance, down from more than 7% two years ago. Housing bond volume last year tumbled to $17.84 billion from $30.66 billion in 2007.
Shields said he expects housing bond issuance to pick up at some point. When it happens, Morgan Stanley wants to be ready, he said.
A number of smaller firms have added muscle to their public finance groups this year, including Stone & Youngberg, Samuel A. Ramirez & Co., and Jefferies & Co.
These firms often say they are looking to pick up business lost from the big banks. Shields claims the facts do not bear this trend out.
Last year, the top five firms managed 55.7% of new issues. So far this year, the top five have managed 58.3%.
The five names are the same.
Other key Morgan Stanley hires this year include Warren "Bo" Daniels, who previously headed the public finance group at Loop Capital Markets; Glen Balanoff, who rejoined the company after a brief stint at Bank of America; Sewon Kim, formerly a vice president at JPMorgan; and Gabby Taylor, former a vice president at Credit Suisse.
