Morgan Stanley Chairman John Mack, whose sharp elbows and aggressive cost-cutting tactics earned him the nickname "Mack the Knife," will step down at year-end, handing the post to Chief Executive James Gorman.

Mack, 66, joined Morgan Stanley in 1972 as a bond salesman and worked his way up through the ranks to become president and chief operating officer of Morgan Stanley Dean Witter in 1997.

He left in 2001 after a power struggle with former CEO Phil Purcell. In 2005, Purcell stepped down amid criticism as Morgan Stanley's performance lagged Wall Street peers, and Mack took the reins as CEO.

When Mack returned to the bank, he received a standing ovation on the trading floor. He worked to strengthen Morgan Stanley's trading department but also piled on risk, a policy that hurt the bank leading into the financial crisis of 2007 to 2009.

Gorman will remain CEO and add the post of chairman on January 1, a move that was expected. Gorman was named CEO in 2010 and Mack stayed on for a planned two-year transition period.

Mack will retire from a full-time role but remain a senior adviser to Morgan Stanley.