Morgan Stanley's James Gorman may become the likely successor to Chief Executive Officer John Mack by taking charge of the firm's brokerage joint venture with Citigroup Inc.

Mack has a five-year contract that's up for renewal next year. Gorman, a 50-year-old Australian, may oversee the venture, tentatively named Morgan Stanley Smith Barney, a person with knowledge of the matter said. Gorman has been one of two co-presidents at the New York-based firm for more than a year.

"James Gorman would emerge as the key executive at the company and, presumably, be in lead position to be the next CEO in 2010," Richard Bove, an analyst at Ladenburg Thalmann & Co in Lutz, Florida, wrote in a note to investors on Jan 10. "This acquisition would increase meaningfully the importance of retail finance and perhaps banking at Morgan."