NEWSMAKER-Zoe Cruz, a power among Wall Street women, steps aside

By Jonathan Stempel

NEW YORK, Nov 29 (Reuters) - Zoe Cruz was regarded as perhaps the most powerful woman executive on Wall Street, and one of the most powerful in corporate America. Her future isn't quite so clear.

Cruz, 52, retired Thursday as co-president of Morgan Stanley (MS.N), following 25 years at the investment bank.

Her departure came just three weeks after a person familiar with the situation said Chief Executive John Mack, 63, had named her the leading candidate to eventually succeed him.

Cruz is the highest-ranking female Wall Street executive to depart amid industrywide losses linked to mortgages and other debt. She leaves three weeks after Morgan Stanley revealed $3.7 billion of losses on subprime mortgage trades in September and October. The company's shares are down 23 percent this year.

"On Wall Street, you are highly paid and you are paid to generate profitability. When you have trading mistakes, it's important to realize that the buck stops here," said Brad Hintz, an analyst at Sanford C. Bernstein & Co.

Cruz had made $30 million in 2006, when Morgan Stanley said profit had risen 51 percent to a record $7.47 billion.

In a statement, Mack said markets "are changing rapidly, and we're putting in place a leadership team that is ideally suited to help Morgan Stanley realize the opportunities ahead, while continuing to navigate the current challenging conditions."

Walid Chammah, head of Morgan Stanley's European, Middle East and Africa operations, and James Gorman, head of wealth management and co-head of strategic planning, were named co-presidents. Robert Scully, the other co-president with Cruz, was moved to a new Office of the Chairman.

Cruz was unavailable for comment.

But Hintz, a former Morgan Stanley treasurer and chief financial officer at Lehman Brothers Holdings Inc LEH.N, said: "Zoe is a very talented person. (She) is going to be sitting on lots of boards for the rest of her life."

CRUZ MISSILE

Until this week, Cruz was viewed as a survivor of a global credit crisis that has cost many banking executives their jobs, including Citigroup Inc (C.N) Chief Executive Charles Prince and Merrill Lynch & Co MER.N Chief Executive Stanley O'Neal.

She was also a survivor of Morgan Stanley's 2005 management turmoil that led to the ouster of Philip Purcell as chief executive and installation of Mack to replace him.

Press-shy, but with a hard-charging manner that earned her the nickname "Cruz Missile," the mother of three was ranked fourth on Nov. 19 in The Wall Street Journal's list of "50 Women to Watch" in business.

She trailed only the chief executives of health insurer WellPoint Inc (WLP.N) and soft-drink maker PepsiCo Inc (PEP.N), Angela Braly and Indra Nooyi respectively, and the European Union's antitrust chief, Neelie Kroes.