Brit is hot bet to be Morgan Stanley boss

Sir Deryck Maughan, the former head of the international side of Citigroup, has been tipped to take over as chief executive of Morgan Stanley.

Sir Deryck Maughan, the former head of the international side of Citigroup, has been tipped to take over as chief executive of Morgan Stanley.

The Wall Street investment bank was plunged further into crisis last week when its chief executive, Philip Purcell, resigned after weeks of fighting with dissidents who had quit the company.

Headhunters Spencer Stuart were appointed to find a new chief executive, with the brief that none of the eight former senior executives who had clashed with Mr Purcell would be considered for the role. Another senior ex-Morgan Stanley executive, John Mack, who quit after clashing with Mr Purcell three years ago, and then briefly resurfaced running rival CSFB, was also ruled out.

Senior bankers have told The Independent on Sunday that Morgan Stanley needs to fill the void or face a damaging period without leadership. "When there is a void at a top of a people business, the work suffers as everyone sits around speculating about the future, and this hits the bottom line badly," said a rival banker.

Senior sources said that approaches had already been made to Sir Deryck, a Briton who came to prominence leading the restructuring of Salomon Brothers when it was embroiled in scandal in the 1990s.

The investment bank was later taken over by Travellers, which then merged with Citicorp, the world's largest bank, to form Citigroup. Sir Deryck, 57, was placed in charged of the international side of the giant group but was forced to quit after the group's Japanese business became involved in a financial scandal.

It is understood the US regulators have no problems in his taking a senior role. He is currently available and understood to be interested.

Other bankers with British connections are in the frame. Bob Diamond, the £15m-a-year head of Barclays Capital and a former Morgan Stanley executive, has refused to rule himself out, while Larry Fink, the founder of asset manager BlackRock and a former head of the US arm of Royal Bank of Scotland, is also widely tipped.