Under the change, announced yesterday, James Gorman, head of Morgan Stanley’s wealth management business, will replace Mr Mack, who retains his role as chairman. Mr Gorman takes up the post next year.

Morgan Stanley also announced that co-president, Walid Chammah, will become chairman of Morgan Stanley International at the end of this year and continue to be based in London.

Mr Mack’s move comes after a tumultuous four-year reign at the helm of the firm, which has been battered by the financial crisis. Almost exactly a year ago, Morgan Stanley witnessed one of its long-standing rivals, Lehman Brothers, go bankrupt. Along with Goldman Sachs, Morgan Stanley has become a bank holding company. It has also received US taxpayer’s money to bolster its finances under the Troubled Asset Relief Program, or TARP.

"John has provided invaluable leadership to the firm - including, most importantly, successfully guiding Morgan Stanley through last fall's unprecedented financial crisis and positioning the Firm to succeed in today's reshaped market environment.  After returning to Morgan Stanley in 2005, John effectively stabilized the Firm and reenergized our culture and client franchise.  More recently, he helped to strengthen our capital position and repay TARP; oversaw our conversion to a bank holding company; and forged strategic ventures with Smith Barney and Mitsubishi UFJ that will play a key role in growing Morgan Stanley's business for years to come,” said Robert Kidder, lead director at the firm’s board.

Mr Gorman headed the private client business at Merrill Lynch before joining Morgan Stanley in 2006. The fact of his appointment demonstrates how wealth management and the retail brokerage business is increasingly viewed as vital to Morgan Stanley’s future strategy.

However, Mr Gorman has rebuffed suggestions that the firm is turning its back on investment banking. “The institutional business is in our DNA, it’s the core of the business”, he was quoted as saying by the Financial Times.