NEW YORK – Morgan Stanley is preparing a fresh round of job cuts amid a renewed focus on expenses as recession fears delay a rebound in dealmaking.
Senior managers are discussing plans to eliminate about 3,000 jobs from the global workforce by the end of this quarter, according to people with knowledge of the matter.
That would amount to roughly 5 per cent of staff, excluding financial advisers and personnel supporting them within the wealth management division.
The banking and trading group is expected to shoulder many of the reductions, one of the people said.
A spokesman for Morgan Stanley, which employs about 82,000 people, declined to comment.
The cuts come just months after the firm trimmed about 2 per cent of its workforce.
Wall Street’s biggest banks offered few reasons for cheer while reporting first-quarter results after seeing their fees from helping companies with takeovers and raising capital – a proxy for the economy’s health – slump over the past year.
The United States Federal Reserve’s desire to curb inflation through rate hikes and the ensuing regional banking tumult have further damped activity.
Chief executive James Gorman said in April underwriting and mergers activity has been subdued, and that he does not expect a rebound before the second half of 2023, or 2024.
Mr Ken Jacobs, who runs financial advisory firm Lazard, echoed the sentiments as he forecast that the industry’s doldrums will last for the rest of 2023.
Lazard will eliminate 10 per cent of its workforce, the firm said last week.
Mr Jacobs noted that dealmaker pay has surged in recent years as junior bankers demanded higher salaries amid a boom.
It is harder to roll back those raises, while costs for travel, entertainment and information services have soared as well, he last week.
In the first quarter, Morgan Stanley’s profit fell from a year earlier, dragged down by a drop-off in dealmaking, with a 32 per cent decline in its merger advisory and 22 per cent slump in its equity underwriting business.
Analysts are forecasting that revenue from banking fees will be in line with 2022’s haul – which was roughly half the US$10.3 billion (S$13.8 billion) that the bank pulled in during 2021’s dealmaking frenzy.
Job cuts across finance have returned since the Covid-19 pandemic, when banks held off on reductions to give employees stability and then fought for talent as deals picked up.
But as that frenzy cooled, expenses have become the focus, with several banks unveiling plans to fire staff.
Morgan Stanley in December cut roughly 1,600 jobs. Then Goldman Sachs Group eliminated about 3,200 positions in January in one of its biggest cuts ever.
On Monday, Citigroup CEO Jane Fraser said her company is willing to make adjustments to staffing levels at its investment bank. BLOOMBERG