NEW YORK (Reuters) - Eric Heaton, a veteran investment banker who has worked on some of the banking industry’s largest merger deals, has left Deutsche Bank (DBKGn.DE) to join Morgan Stanley (MS.N), according to people familiar with his plans.
Heaton, head of Deutsche’s North American financial institutions group, resigned on Monday, said an assistant who answered his phone. Heaton did not immediately return a call for comment and representatives of Morgan Stanley and Deutsche Bank declined comment.
Heaton will be making a career shift, taking a senior position in Morgan Stanley’s burgeoning wealth management group, the people said. He and Greg Fleming, head of the bank’s wealth management and asset management divisions, worked together at Merrill Lynch for more than 15 years prior to the investment bank’s 2009 sale to Bank of America Corp. (BAC.N)
Morgan Stanley Chief Executive James Gorman, who once ran Merrill’s retail brokerage business, has made a big bet on selling investment services to wealthy individuals by buying a majority stake in Citigroup’s (C.N) Smith Barney business with an option to acquire the whole firm by May 2014.
The venture, the world’s largest securities broker with about 17,000 financial advisers, has stumbled in meeting cost-savings and profitability goals because of problems integrating three different technology platforms and generally sluggish stock trading by individual investors.
“The retail business is more than a year behind on its scheduled expense reduction, so Greg Fleming is bringing in a trusted lieutenant to run his SWAT team,” said Brad Hintz, an analyst at Sanford Bernstein. “It’s a good solid management approach, but he has to be careful to play down the Merrill angle. Brokers won’t like if the firm is being run like an occupied France.”
Heaton led a team of 12 financial company investment bankers, including two of his brothers, who jumped from Bank of America Merrill Lynch in February 2009 to Deutsche Bank. His twin, David, who specializes in asset management deals, left Deutsche in 2010 to join Morgan Stanley. Seth Heaton, who works on specialty finance and real estate investment trust deals, remains at Deutsche Bank.
Eric Heaton and his team advised Dutch bank ING ING.AS on the $9 billion sale of its online U.S. bank to Capital One, this year’s biggest banking deal in a very weak climate for M&A transactions.
In addition to working on large banking deals at Merrill, Heaton served as treasurer of the investment bank when it was furiously seeking funding during the financial crisis of 2008.
Merrill sued Heaton and Deutsche Bank in 2009, alleging that the banker breached his contract by leaving without giving six months’ notice. “The investment banking group lured away by Deutsche Bank generated tens of millions of dollars in annual revenues,” Merrill claimed in a lawsuit filed in New York State Supreme Court in 2009.
The suit was discontinued in 2010, and the banks declined to discuss what settlement terms they may have reached.
Heaton’s move was reported earlier by Bloomberg News.
(The story was corrected to fix first name of Heaton’s twin brother to David, not Eric, in paragraph 7)
Reporting By Jed Horowitz; editing by Matthew Lewis