Morgan Stanley has announced that John Mack will step down as CEO by the end of the year, but will remain as the firm’s chairman.

Co-president, James Gorman, will become the firm’s new CEO, effective January 1, 2010. Gorman‘s counterpart, co-president, Walid Chammah, will become chairman of Morgan Stanley International at year end and will continue to be based in London.

Gorman, 51, has served as co-president of Morgan Stanley for the past two years, overseeing the firm’s global wealth management business and investment management business. Prior to joining Morgan Stanley, he was at Merrill Lynch, leading its global private client business from 2001 to 2005.