SIR DAVID WALKER, the chairman of Morgan Stanley International, has emerged as a front-running candidate to replace Philip Purcell as chief executive of the embattled investment bank.

Sir David, who is 65, is considered by some on the board to be the right man to restore Morgan Stanley’s tattered reputation among Wall Street’s top-flight investment bankers.

“Sir David is extremely well liked by the investment bankers,” a Morgan source told The Times. “The bank needs stability, its needs a blue-blooded Morgan Stanley man to calm things down. Sir David would be ideal.”

The Briton is understood to have discussed his candidacy with close friends from the investment bank, but has not yet decided to apply for the top job. If he does, it is likely that he will ask for a two-year contract.

Mr Purcell was forced to leave the bank after a campaign by a group of former directors known as The Group of Eight and The Grumpy Old Men. They believed that Morgan Stanley’s merger with Dean Witter, a credit-card and retail banking business that was formerly run by Mr Purcell, had destroyed Morgan Stanley’s franchise.

They wanted Mr Purcell to resign, or to demerge the Dean Witter businesses, leaving Bob Scott, a former Morgan director and leader of the Group of Eight, in charge of the investment banking arm.

As chairman of Morgan Stanley International and a member of the management committee of the board of Morgan Stanley Dean Witter, Sir David runs the group’s European business. He is also the former deputy chairman of Lloyds Bank, former chairman of the Securities and Investments Board and was a director of the Bank of England.

Possible contenders from outside the bank include Larry Fink, the founder and leader of BlackRock, an asset management firm; Robert Diamond, head of Barclays Capital; and John Thain, the former head of Goldman Sachs who now leads the New York Stock Exchange.

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