Morgan Stanley to cut 1600 global jobs
The Wall Street investment bank is cutting 1600 staff, with about half the reductions coming from outside the US.
It is thought the Australian operations will be affected, although there were no specific numbers on job losses. Morgan Stanley said it had more than 800 employees in seven offices across Australia.
The investment bank also employs several thousand people in London.
Morgan Stanley chief executive James Gorman warned last year that the industry still had "way too much capacity and compensation is way too high".
The cuts will come from the investment banking business, with more expensive senior employees among those most at risk.
Mr Gorman's move to cut so early in the year is a sign of the pressure that investment banks remain under more than four years since the financial crisis.
A combination of Europe's debt crisis, fresh financial regulations and a still lacklustre recovery in the US have made it harder for banks to return to the level of profits they had before the financial crisis.
As well as front-line staff such as bankers and traders, the cuts at Morgan Stanley are expected to include support staff.
The news comes days before the Wall Street investment bank releases its results for the fourth quarter.
Analysts and shareholders will be looking for signs from Morgan Stanley and its major rivals - such as Goldman Sachs and JPMorgan Chase - of how they intend to lift returns this year even as the global economy remains relatively weak. So far, most have relied on cost-cutting.
Morgan Stanley employed about 57,000 people at the end of last year after eliminating 4000 positions in 2012.
Frequently Asked Questions about this Article…
Morgan Stanley announced it will cut about 1,600 staff, making it one of the first big financial services groups to enact layoffs this year. The bank said roughly half of the reductions will come from outside the US.
The cuts are focused on the investment banking business. The article says more expensive senior employees are among those most at risk, and the reductions are expected to include frontline bankers and traders as well as support staff.
The article says Australia is thought to be affected, but Morgan Stanley did not give specific numbers. The firm had more than 800 employees across seven offices in Australia, so local operations could see some of the reductions.
Morgan Stanley’s CEO James Gorman had warned the industry had 'way too much capacity and compensation is way too high.' The article links the timing to ongoing pressure on banks from Europe’s debt crisis, new financial regulations and a still lacklustre US recovery.
At the end of last year Morgan Stanley employed about 57,000 people. The article notes the bank eliminated about 4,000 positions in 2012; the current announcement of 1,600 cuts is a further reduction.
The job-cut announcement came days before Morgan Stanley was due to release its fourth-quarter results. Analysts and shareholders will be watching the results and cost-cutting measures for signs of how the bank — and its rivals — plan to lift returns in a weak global economy.
The article names rivals such as Goldman Sachs and JPMorgan Chase and says analysts will look to those firms for signals about lifting returns. While it doesn’t say those rivals are cutting jobs now, it notes that many banks have relied on cost-cutting so far.
Everyday investors should watch Morgan Stanley’s upcoming fourth-quarter results and any further statements about restructuring or cost savings. Given the article’s emphasis on industry pressure, investors may also follow how other big banks respond and whether cost-cutting is translating into better returns.
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