CHICAGO — Veteran Chicago-based municipal banker Warren “Bo” Daniels Jr. has resigned from Loop Capital Markets LLC to join Morgan Stanley after nearly six years, during which he built Loop’s public finance banking group.

Morgan Stanley public finance head Stratford Shields — who was a longtime Chicago-based banker before his appointment to lead the group nearly two years ago and has long known Daniels — announced the addition in a memorandum to banking, sales, and trading staff on Wednesday.

“The breadth and depth of Bo’s experience will be an important and valuable asset to the firm. Please join me in welcoming Bo,” Shields wrote in the memorandum obtained by The Bond Buyer. Daniels starts on Monday as an executive director.

Daniels will cover major infrastructure accounts throughout the country and Chicago-area issuers. Daniels will join a team of seven bankers in the Chicago office, including five that work on infrastructure and two in the nonprofit health care sector. Chicago-based banker William Mack and New York-based William Daley Jr. cover some of the same Midwestern territory.

A Morgan Stanley representative said Daniels’ reach will extend beyond the Midwest to include Southeastern areas like Atlanta. Daniels also will work with Mack, Daley, and others who deal with Midwestern issuers. The firm has looked over the last year to add to its transportation, infrastructure, and public power capabilities through new banking hires.

The addition of Daniels can only help the firm, local sources said, as Daniels is a prominent African-American banker who is well-respected as both a technical and relationship banker. Morgan Stanley ranked fourth so far this year in the Midwest and nationally among senior managers and fourth last year in the Midwest and nationally last year, up from eighth in the Midwest and sixth nationally in 2007, according to Thomson Reuters.

Before joining Loop in early 2003, Daniels worked as a banker and co-head of the Chicago office at Goldman, Sachs & Co. Daniels, who specialized in infrastructure banking, had joined Goldman in 1989 in New York City. He moved to Chicago in 1997 to lead the firm’s Midwestern effort.

Loop’s chief executive officer, James Reynolds, courted Daniels, and in 2003 Daniels made the move to oversee the building of Loop’s banking business. Reynolds started the qualified minority-owned firm with his wife Sandy and Albert Grace Jr. in 1997 with just a handful of employees. Reynolds had initially concentrated on establishing the firm’s sales and secondary trading business, but brought Daniels in when Loop was ready to take the next step and compete for senior manager business.

During Daniels’ tenure, Loop tripled the size of its banking staff, often hiring veteran industry professionals, and opened a series of new offices, including ones in Florida and California.

The firm announced in March the opening of a San Francisco office, the hiring of Nikolai J. Sklaroff to lead its cultural institutions group, and the addition of Clarence K. Bourne, a former JPMorgan public finance banker, to the Chicago office.

Loop operates a total of 14 offices with 100 corporate and tax-exempt professionals and underwriting, sales, and trading desks in Chicago and New York City.

Loop has steadily risen in the ranks. It ranks 33d in the Midwest so far this year, and 29th nationally.  It was 16th last year and 15th a year earlier in the Midwest, and 20th nationally last year and 23rd in 2007.

In 2002, before Daniels started, the firm ranked 77th in the Midwest and 97th nationally. Daniels started mid-year in 2003 and the firm finished 23rd in the Midwest and 41st nationally, according to Thomson.

Daniels could not be reached to comment on his move.

Numerous public finance sources said Daniels had clashed with Cody Press, Loop’s Los Angeles-based banker who is the western regional head, and that Reynolds and Daniels’ relationship was strained, with Reynolds upset over the firm’s absence in several large deals in California.

Reynolds yesterday said like any head of an investment bank he wants a role in any major deal, but he called the sourced comments untrue and said he holds Daniels in high regard and would welcome his return.

“Bo was the architect of our banking infrastructure and I will always be thankful for his efforts,” Reynolds said. “Bo is one of the hardest-working and well-liked individuals I know. We remain great friends and the doors at this firm are always open to him. This was just an incredible opportunity for him to work at a top firm.”

In Daniels’ absence, Reynolds is resuming responsibilities of managing the banking group and the firm remains in growth mode.

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