Dive Brief:
- Senior managers at Morgan Stanley are discussing cutting roughly 3,000 jobs at the bank by the end of June, Bloomberg, Reuters, CNBC and the Financial Times reported Monday, citing people familiar with the matter.
- That’s nearly double the 1,600 positions Morgan Stanley cut in December. At the time, CEO James Gorman said he expected no further reductions, according to the Financial Times.
- The investment banking and securities divisions are expected to shoulder many of the layoffs, a source told Bloomberg and the Financial Times. Customer-facing financial advisers in the bank’s wealth-management division — and the staff that support them — would largely be immune, the publications reported.
Dive Insight:
Reports of looming cuts come less than a month after Gorman said Morgan Stanley’s investment-banking activities “remain very subdued,” adding that revenues may not recover until next year.
Profit from Morgan Stanley’s merger advisory business saw a 32% drop during the first quarter, compared with the same period last year, according to Bloomberg. Likewise, profit in equity underwriting fell 22%, the wire service reported.
That helped drive revenue at the bank’s institutional securities group to an 11% slump in the first quarter, according to Bloomberg. Meanwhile, revenue at Morgan Stanley’s wealth-management unit jumped by the same percentage.
M&A volumes have slumped nearly 50% from the first quarter of 2022, according to Dealogic.
A Morgan Stanley spokesperson declined to comment to Bloomberg and the Financial Times on the expected cuts. However, CFO Sharon Yeshaya said last month that "expense management" is a priority in the face of market uncertainty and elevated inflation, according to Reuters.
For his part, Gorman in October said the bank had “learned some things during COVID about how we can operate more efficiently.”
Morgan Stanley’s workforce grew by 34% between January 2020 and September 2022, according to CNBC. But much of that stemmed from the bank’s 2020 acquisitions of E*Trade and Eaton Vance.
Morgan Stanley is hardly alone in reducing its headcount. The bank’s December cuts effectively launched right-sizing season — although a round of layoffs that eventually encompassed 3,200 Goldman Sachs workers had been brewing for months.
BNY Mellon and Capital One followed with their own cuts of more than 1,500 and 1,100 employees, respectively, in January.
Other banks pulled out of businesses they see as non-core. Wells Fargo in January said it would exit correspondent lending and later made 500 more cuts to its home-lending division.
Not every cut has been massive. Truist has launched at least two small rounds of layoffs this year. Barclays laid off 100 employees in investment banking last month.
Some headcount reductions have gone under the radar. Bank of America cut at least 1,000 jobs in April and plans to cut another 3,000 by the end of June, according to figures it disclosed during a first-quarter earnings call.
Citi, meanwhile, is cutting hundreds of positions, Bloomberg and Reuters reported in March. And the bank’s CEO, Jane Fraser, told Bloomberg on Monday that Citi is willing to further tweak staffing levels at its investment bank.
“Like every institution, you make some adjustments around the capacity, but we’re playing the long game in investment banking,” she said.
Boutique banks have felt the sting, too. Lazard last week said it would cut its workforce by 10% this year.
“Candidly, things are not feeling as good as they were in December or January,” CEO Ken Jacobs told Bloomberg on Friday.
