Morgan Stanley Co-President Zoe Cruz is retiring as the subprime mortgage crisis ends a 25-year tenure for a woman who had been seen as the front-runner to succeed Chief Executive John Mack.

Cruz, the highest-paid female executive on Wall Street, will end her career at the firm three weeks after it disclosed $3.7 billion of losses on mortgage-related securities.

The executive, who earned $30 million in 2006, adds to the list of banking executives who have stepped down amid a wave of credit losses tied to subprime home loans.

Warren Spector, the former co-president of Bear Stearns Cos., was forced out in August, followed by Merrill Lynch & Co. CEO Stan O'Neal and Citigroup Inc. chief Charles Prince.

Her resignation was also part of a broad management shake-up at the second-largest U.S. investment bank. Walid Chammah and James Gorman were named co-presidents. Robert Scully, co-president with Cruz, is joining a new Office of the Chairman. Morgan Stanley's co-trading head, Neal Shear, is now chairman of the company's commodities business.

Morgan Stanley shares have tumbled 23 percent this year, the steepest annual decline since 2002. While the stock lags behind the 13 percent gain by Goldman Sachs Group Inc., the biggest U.S. securities firm, it has outperformed the 38 percent drop at Merrill Lynch and the 39 percent slump at Bear Stearns.

Cruz, 52, joined Morgan Stanley in 1982 as a foreign exchange trader and rose to become head of fixed income trading by 2000.

A Morgan Stanley spokesman Mark Lake said Cruz and Mack declined to comment.

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