Jack DiMaio, a former Credit Suisse Group AG
Weak trading results are expected to weigh on overall profitability at Morgan Stanley, which became a bank holding company and reduced risk as the credit crisis exploded last September. Analysts on average expect a second-quarter loss of 50 cents per share, according to Reuters Estimates.
Despite the shake-up, analysts said they were growing more optimistic about Morgan Stanley's quarter after trading results helped fuel better-than-expected quarterly profits at Goldman Sachs Group Inc
Earnings of the investment banks have generally surprised on the upside, and our thinking is Morgan Stanley could surprise on the upside as well, said Bill Hackney, chief investment officer of Atlanta Capital Management Co.
Morgan Stanley CEO John Mack reduced risk and diversified the bank's business to expand access to deposits. The company lost $578 million in the first quarter.
To me, the issue with Morgan Stanley is not going to be whether one trading desk did too badly, said Brad Hintz, an analyst with Sanford C Bernstein & Co in New York. It will be whether John Mack held the reins too tightly.
He added, Let's see if Morgan Stanley has climbed out of their foxholes and if they've joined in the fight with everybody else.
Morgan Stanley said DiMaio's hiring is part of an effort to bolster its client flow business. It is also buying a minority stake in DiMaio Ahmad Capital LLC, DiMaio's previous firm.
The appointment follows the hiring of seven others in sales and trading in emerging market credit earlier this month.
DiMaio has worked for more than 20 years in the bond and credit markets. He will report to Michael Petrick, global head of sales and trading.
(Reporting by Steve Eder; Editing by John Wallace)