Morgan Stanley hires Credit Suisse’s Jack DiMaio before posting losses

Morgan Stanley shook up its fixed-income trading leadership, two days before the Wall Street bank is expected to announce a second-quarter loss. Jack DiMaio, a former Credit Suisse Group AG fixed-income head for North America, was named global head of interest rate, credit and currency trading at Morgan Stanley. According to a source familiar with the matter, he will succeed Robert Hoornweg, a London-based executive, and will report to Michael Petrick, global head of sales and trading.

Analysts expect that weak trading results will weigh on overall profitability at Morgan Stanley, which became a bank holding company and reduced risk as the credit crisis exploded last September. Besides, analysts on average expect a second-quarter loss of 50 cents per share.

Despite the shake-up, analysts said they were more optimistic about Morgan Stanley's quarter after trading results helped fuel better-than-expected quarterly profits at Goldman Sachs Group Inc and JPMorgan Chase & Co.

Bill Hackney, chief investment officer of Atlanta Capital Management Co., said: "Earnings of the investment banks have generally surprised on the upside, and our thinking is Morgan Stanley could surprise on the upside as well."

Morgan Stanley CEO John Mack decreased risk and diversified the bank's business to expand access to deposits. The company lost $578 million in the first quarter.

In addition, Morgan Stanley said DiMaio's hiring is part of an effort to bolster its client flow business. It is also buying a minority stake in DiMaio Ahmad Capital LLC, DiMaio's previous firm. The appointment follows the hiring of seven others in sales and trading in emerging market credit earlier this month.