Morgan Stanley has shifted the roles of several top executives as the firm sets out to strengthen its international presence, according to a company memo from Morgan Stanley CEO James Gorman obtained by On Wall Street.

In the memo, Gorman announces that Colm Kelleher, co-president of institutional securities, will relocate to London and assume new responsibility for Europe, the Middle East and non-Japan Asia. The heads of those regions will report to Kelleher, who will also have responsibility for the firm’s global sales and trading business.

Paul J. Taubman, also co-president of institutional securities, will remain in New York and expand his role to oversee Latin America, one of Morgan Stanley’s fastest growing regions, according to Gorman, and Japan. The heads of those regions will report to Taubman. As co-president of institutional securities, Taubman will oversee the global investment banking and capital markets businesses.

Walid Chammah is set to continue as chairman of Morgan Stanley International reporting to Gorman. In that role, Chammah will focus exclusively on high priority clients.

“These respective roles for Colm, Paul and Walid will ensure that we are leveraging our most experienced leaders in the best way possible to support the growth of our international franchise. All three will remain on both the operating and management committees,” Gorman said in the memo.

Morgan Stanley’s leadership shift follows the appointment of Jim Rosenthal to the role of chief operating officer earlier this week.

“I think that Morgan Stanley, like some of its rivals, is trying to increase its exposure overseas, particularly at a time when the U.S. economy remains relatively weak,” said Matt Burnell, a senior equity analyst focusing on large cap banks at Wachovia.

Morgan Stanley had a weaker than expected earnings forecast for the fourth quarter, according to a Dec. 30 Credit Suisse analyst report. Market conditions that were “choppier than expected” and numerous one-time items led Credit Suisse to downgrade its fourth quarter earnings estimates for Morgan Stanley to $0.20 per share from $0.60.

“Of note, we anticipate a stronger finish to 2010 for Morgan Stanley’s investment banking franchise,” with strong underwriting and M&A, Credit Suisse’s report said, “and some signs of retail re-engagement in global wealth management results.”

Morgan Stanley’s global wealth management will have $3.2 billion in fourth quarter revenue, Credit Suisse forecasts, a 4% increase from the third quarter and a 3% increase from the previous year.

Morgan Stanley is committed to completing its acquisition of Smith Barney, a transaction set to combine their brokerage businesses, Gorman said at a conference in November. Morgan Stanley could buy the next 14% of Smith Barney as soon as May 2012, Gorman said at that time.

“That business is clearly a part of their future growth plans,” Wachovia’s Burnell said of the ongoing transaction. “Barring an unforeseen decline in that investor activity, there’s no reason to believe that they would shy away from that.”