Philip Purcell was the man who insisted on ultimate control at Morgan Stanley. Yet, in the end, even one of the best-paid men on Wall Street did not have control of his own destiny.

The departure of Morgan Stanley's chief executive was reported in New York by CNBC this morning. In a letter to Morgan Stanley staff, Mr Purcell confirmed that he would be retiring, writing: "It has become clear that in light of the continuing personal attacks on me, and the unprecedented level of negative attention our firm... has had to endure, that this is the best thing I can do."

The company's stock rose almost 6 per cent in pre-trade deals on the news, despite Morgan Stanley also issuing a profits warning that places earnings at up to 20 per cent below expectations.

Morgan Stanley insiders told Times Online that Mr Purcell had approached the board last week, unhappy that the campaign against him personally was affecting the company in general. In that, the board was in full agreement. Mr Purcell is expected to leave as soon as a firm of corporate headhunters has found a suitable replacement.

Mr Purcell received a total of $22 million in pay and perks last year, making him one of the highest paid executives on Wall Street. On top of a basic salary of $775,000, he picked up a cash bonus of $7.4 million and received restricted stock worth almost $13.8 million.

But he had been at the centre of internal turmoil at the investment bank, which has seen an exodus of top staff in recent months and full-page newspaper advertisements from ex-employees calling for his replacement. The mass resignation on Friday by nine traders in the structured-products group was "the last straw" for the board of directors, according to the reports from CNBC.

Alone among the five largest securities firms on Wall Street, Morgan Stanley failed to report record profit in 2004 and in 2005's first quarter. Its brokerage profit trails rivals such as Merrill Lynch.

Shares in Morgan Stanley had fallen 10 per cent since Mr Purcell demoted his president and No 2, Stephan Newhouse, on March 28, leading to the resignation of Mr Newhouse and other key executives.

Aged 61, Mr Purcell had occupied the top job at Morgan Stanley since 1997, when he led the $11 billion takeover of the Wall Street bank while in charge at Dean Witter Discover, the American group that owns the Discover credit card brand.

He took over as chief executive at the expense of John Mack, the senior Morgan Stanley banker who he ousted in 2001.

A former managing partner at McKinsey, the business consultancy, Mr Purcell soon garnered a reputation as a domineering chief executive at Morgan Stanley amid growing concerns about the bank's lacklustre share price performance compared with its Wall Street rivals.

In March this year, eight disgruntled Morgan Stanley executives, calling themselves "the grumpy old men", took out full-page newspaper advertisements that criticised Mr Purcell for stifling profit.

They urged his replacement with one of their own, former president Robert Scott, and said the firm should be split into an investment bank, retaining the Morgan Stanley name, and a separate company led by Purcell, to house its brokerage, asset-management and credit card units.

But according to one board member, Chuck Knight, Mr Purcell's replacement is unlikely to come from the Grumpy Old Men or other dissidents.

Mr Knight said, "Members of the group of eight, the five recently departed management committee members and John Mack are not being considered as candidates for Phil’s replacement."

The bank also announced today that it expects its fiscal second-quarter profit to fall short of analysts’ forecasts, citing weakened market conditions.

Morgan Stanley said it expects second-quarter profit per share to be as much as to 20 per cent less than the $1.10 it reported last year.

Morgan Stanley also said it does not expect to change its $360 million reserve for a lawsuit involving camping equipment company Coleman.

Last month, a Florida jury awarded Ronald Perelman $1.45 billion in damages after finding that Morgan Stanley defrauded him when he sold Coleman to the bank’s client, appliance maker Sunbeam. Morgan Stanley has said it plans to appeal.

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