BOB SCOTT, the former Morgan Stanley director vying to take over as chief executive, believes he can boost profits by $2 billion and increase the investment bank’s market value by as much as $30 billion if he gets the top job.

At a meeting of shareholders in Manhattan on Wednesday night, Mr Scott set out his vision for Morgan Stanley without Philip Purcell, the present chief executive, at its helm.

Mr Scott is the leader of a group of dissident former Morgan Stanley directors known as the Grumpy Old Men, who believe Mr Purcell and his cohorts are destroying the investment bank’s value.

Mr Scott claimed that Mr Purcell has allowed crucial parts of Morgan Stanley, such as the private banking business, the retail banking business and the alternative investments arm to decline since a merger with Dean Witter.

The Times has learnt that Mr Scott would focus on selling products such as mortgages and deposit accounts to increase long-term revenues at the retail banking arm. He also wants to boost the sale of fixed income products.

The former director believes that an increased focus on those arms of Morgan Stanley could lead to a $2 billion increase in profits within two years of him taking over as chief executive.

In his presentation to shareholders on Wednesday night Mr Scott claimed that Morgan Stanley’s market value, which is about $61 billion (£33 billion), should be about $30 billion greater.

According to Mr Scott’s analysis, the institutional banking business of Morgan Stanley is worth about $45 billion, which leaves some $16 billion of market value for the rest of the group.

But, Mr Scott claims, the retail banking arm, which was brought into the group during the Dean Witter merger in 1997, should also be worth $45 billion because both Morgan Stanley and Dean Witter were valued equally at the time of the deal.

The Discover credit card business, a large part of the retail banking arm, has been valued at about $14 billion, which leaves only $2 billion of value for the remainder of the company, Mr Scott claimed.

A spokesman for Morgan Stanley said, however, that Mr Scott’s sum of the parts valuation of the group was “a bit squiffy”. “We don’t know where he gets the $45 billion from,” he added.

The Morgan spokesman said that a $45 billion market value for the institutional arm means it is worth almost 19 times its earnings. Similar businesses at Goldman Sachs and Lehman Brothers are valued at about 13 times their annual earnings, the spokesman said.

Many analysts were left unimpressed by Mr Scott’s analysis, however.

David Trone of Fox Pitt Kelton wrote: “We believe the continued efforts to oust CEO Phil Purcell by various dissident factions are deteriorating into nothing more than a hollow media event with little material relevance.”

But the pressure on Mr Purcell is so intense that he has hired Martin Lipton, one of the most respected lawyers on Wall Street, to help to fend off the dissident directors’ attack.

Mr Lipton’s presence at Morgan Stanley also prompted speculation that the bank is preparing to defend against a takeover attempt. Both HSBC and Bank of America have been named as possible bidders.

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