Morgan Stanley Cuts 1,200 Jobs
In response to its slowest quarter since the recession for bond trading, Morgan Stanley has cut some 1,200 jobs around the globe in recent days. According to reports, the cuts were broad-based, with the bank's fixed income and commodities business shedding about a quarter of its staff. About 730 of the layoffs were back-office jobs across a number of divisions. In a memo to employees Tuesday, leadership said the cuts will result in businesses that are “critically and credibly sized for the current market.”
A number of Wall Street firms have experienced a lull in trading activity, and a dip in revenue, since the market crashed last summer. Morgan Stanley has been especially impacted, suffering a 42 percent slide in fixed income trading revenue in the third quarter. The company's shares have fallen 12 percent this year, more than double the decline seen in shares of rivals Goldman Sachs and Bank of America. JPMorgan Chase, meanwhile, has seen its shares rise 6 percent since January.
While other parts of Morgan Stanley are in better shape than fixed income trading (advisory revenue surged last quarter), this week's job cuts would seem to indicate the bank isn't expecting a quick rebound. Things could get even worse next week, when the Fed is widely expected to raise interest rates. The cost of trading has already gotten more expensive in recent years due to regulations, and higher interest rates would only exacerbate the problem.