Even before the Obama administration subjected 19 major banks to stress tests this spring, Jonathan Pruzan and his colleagues in Morgan Stanley’s financial institutions group were working on how to help lenders replenish their equity coffers. Last summer, Morgan Stanley created a team of about 20 people, including bankers as well as professionals from fixed income, structured finance and equity capital markets, that began meeting three times a week to brainstorm. It was led by Pruzan, the co-head of North American FIG, and two key senior colleagues, John Esposito and Taylor Wright.
In May, when the results of the stress tests were announced and the banks were ordered to raise capital, Morgan Stanley sprang into action. The playbook developed by Pruzan and his group included overnight deals, which are pulled together quickly to take advantage of sudden market opportunities; marketed deals, which are sold over a period of days; and “dribble-outs” — quiet, steady block trades in which a bank can sell as much as 10 percent of its monthly stock volume. “We were advising all our clients to be ready at a moment’s notice,” says Pruzan, 41.
The results have not been too shabby. As of June 22, Morgan Stanley had surged to No. 2 in bank equity deals for the year, up from No. 9 at the same time in 2008, according to Dealogic. The firm has advised 11 U.S. banks on raising $11.98 billion in equity capital, just behind Goldman Sachs Group, which has advised 12 banks on $12.11 billion in such deals. Pruzan led the Morgan Stanley team that generated $2.7 billion for U.S. Bancorp, $1.7 billion for BB&T Corp., $1.6 billion for SunTrust Banks and $750 million for Fifth Third Bancorp.
The firm moved fast in every case. About one fifth of Fifth Third’s dribble-out had been completed when a sudden burst of investor demand set Morgan Stanley running to sell the remaining $600 million through block trades on June 1. The head of Morgan Stanley’s equity syndicate, Mohit Assomull, gave the sale order over the squawk box at 4:20 in the afternoon. By 5:00, Pruzan had called Fifth Third to let it know there was buying interest for more than $1 billion.
Pruzan grew up in New York City, but well outside the world of Wall Street. His father and grandparents worked in the garment industry. Pruzan followed the lead of his two brothers, who worked at McKinsey & Co. and Goldman Sachs, respectively, in the swaggering, deal-making era of the late 1980s.
Pruzan joined PaineWebber & Co.’s financial institutions group in 1990, the year he graduated from Tufts University with a degree in political science and economics. His first job was as an analyst working for James Kilman, a banker whom Pruzan helped hire at Morgan Stanley last year to head its specialty finance advisory group. Pruzan moved to Morgan Stanley from PaineWebber in 1994. He advised on a flurry of bank deals, from the seminal merger of Chase Manhattan Corp. and Chemical Banking Corp. to Deutsche Bank’s purchase of Bankers Trust Co. to Bank of America Corp.’s acquisitions of FleetBoston Financial and LaSalle Bank Corp.
In 2006 he was promoted by Derek Kirkland, then head of FIG and now a senior adviser at Morgan Stanley, to oversee its U.S. group. Pruzan took up his new post last year just in time for the biggest bank crisis in more than 70 years. “One of the lessons is that market perception becomes reality,” he notes. “You might not agree with it, but it’s best to accept it and move on.”
GMAC Financial Services chief finance officer Rob Hull has appreciated that no-nonsense view as Pruzan has helped the finance company wrest its independence away from General Motors Corp. “Jon has been able to distill strategic options when they’ve not been easily discernible,” Hull says.
