Morgan Stanley to cut 1600 global jobs
INVESTMENT bank employees are bracing for job cuts after Morgan Stanley became the first financial services group to swing the axe this year.
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.