A new round of employment layoffs is being planned by Morgan Stanley, along with a greater focus on expenses as recession fears prevent deal making from picking up.
According to persons with knowledge of the situation, senior managers are debating strategies to cut around 3,000 employees from the global workforce by the end of this quarter. That would represent about 5% of the workforce, excluding financial advisers and those who work in the wealth management division to support them.
Morgan Stanley intends to eliminate 3,000 more jobs;
Banking and Trading Industry
According to one of the persons, the banking and trading industry would likely bear the brunt of many of the reductions. A representative for Morgan Stanley, which has around 82,000 employees and is based in New York, declined to comment.
These layoffs occurred just a few months after the company reduced its employment by around 2%. After seeing their revenues from assisting companies with takeovers and raising capital — a gauge for the health of the economy — decline over the previous year, Wall Street’s largest banks offered few reasons for celebration while announcing first-quarter earnings. The intention of the Federal Reserve to control inflation through rate increases and the subsequent turmoil in regional banking have further slowed down activity.
First Quarter Profit Decreased
Lazard, a company based in New York, said last week that it would reduce its personnel by 10%. Jacobs stated that junior bankers’ demands for increased pay during a boom led to an increase in dealmaker pay in recent years. According to a recent interview with Jacobs, it’s more difficult to reverse such hikes, and expenditures for travel, entertainment, and information services have increased as well.
Morgan Stanley’s first-quarter profit decreased from the same period last year due to a dip in deal making, including a 32% decline in its merger advising business and a 22% decline in its equity-underwriting business. Analysts anticipate that banking fee income would be comparable to last year’s total, which was less than half the $10.3 billion the bank earned during the deal making frenzied of 2021.