Last checked at 
May 22 (Reuters) - Morgan Stanley's head of fixedincome, Ken deRegt, is retiring from the firm, according tointernal bank memos obtained by Reuters, after the companysustained a more than 40 percent decline in bond trading revenuein the first quarter.
The bank's fixed income business is in the middle of fixingitself as it has never fully recovered from big losses duringthe financial crisis. In one memo, senior bank executivescredited deRegt with shrinking the business in a way that hashad "minimal impact on revenues."
Still, Morgan Stanley's first-quarter bond and commoditytrading revenue, excluding adjustments for changes in the valueof the bank's debt, lagged peers, including Goldman Sachs GroupInc and JPMorgan Chase & Co.
Michael Heaney, 49, and Robert Rooney, 46, will head upfixed income, according to two company memos issued on Wednesdayto employees.
The two will continue deRegt's work to rebuild the company'sfixed-income franchise, according to a memo from Colm Kelleher,president for institutional securities.
A new firm, Canarsie Capital Group, has taken on deRegt as apartner and will be a client of Morgan Stanley.
It is the second time deRegt has left Morgan Stanley--heresigned in 2000 after spending 19 years at the firm, the lastthree years as head of fixed income. He went then to a moneymanager and returned to Morgan Stanley in February 2008 duringthe financial crisis to oversee risk management, according toanother memo from Kelleher and from CEO James Gorman.
In January 2011, deRegt became head of fixed income for asecond time to replace Jack DiMaio and restructure the business.
The company has been trying to take market share fromcompetitors, which also include Citigroup Inc Barclays PLC, Bank of America Corp, Deutsche Bank AG, even as it reduces its risk-weighted assets. Somecritics view that goal as unrealistic.
Heaney, who has been in charge of credit trading, joinedMorgan Stanley in 1986 in credit research and later worked inLondon as co-head of global debt syndicate.
Rooney, since 2009, has been head of fixed income sales andtrading for Europe, the Middle East and Africa and global headof fixed income client coverage. He joined Morgan Stanley in1990 as an analyst in fixed income.
