Morgan Stanley plans to lay off 3,000 more workers amid downturn
Morgan Stanley is reportedly planning to lay off an additional 3,000 employees, or 3.6% of its workforce, in the second quarter of this year — the second round of job cuts undertaken by the Wall Street investment bank in the last six months.
Slow dealmaking and a tough economic environment are prompting the investment bank, which employs 82,000 people globally, to look at its headcount, a source told Reuters.
The firm’s banking and trading group are expected to be the most affected by the latest round of cuts, Bloomberg News is reporting.
Shares of Morgan Stanley fell by some 2.6% at around 10:45 a.m. Eastern time on Tuesday.
The latest move follows another quarter in which fees from the investment banking unit fell, dragging total revenue down nearly 2% to $14.5 billion.
Last month, Morgan Stanley finance chief Sharon Yeshaya had said that “expense management” was a priority given the broader market uncertainty and elevated inflation.
Wall Street’s investment banks have suffered from a downturn in deals as investors grew more cautious about volatile markets and rapidly rising interest rates.
Goldman Sachs has reduced headcount by 3,200 jobs, which is the equivalent of 6.5% of its 49,000-strong global workforce.
Barclays, Citi, and Bank of America recently executed hundreds of layoffs in total.
Morgan Stanley’s profit beat expectations as wealth management revenue climbed in the first quarter, offsetting slumps in investment banking and trading revenue.
The bank earned $1.70 per share, beating analysts’ average estimate of $1.62 per share, according to Refinitiv data.
Its stock edged 0.5% higher to $90.34 in afternoon trading.
The Wall Street powerhouse set aside $234 million in the quarter to cover souring loans, rising from $57 million a year ago, as it braced for a recession and weakness in the commercial real estate market.
Morgan Stanley’s wealth management revenue jumped 11% to $6.6 billion versus a year earlier.
The division brought in $110 billion in net new assets, of which only about $20 billion came from regional banks after the March turbulence, Yeshaya told Reuters in an interview.
The provisions were linked to a handful of loans.
“We are not in a banking crisis, but we have had, and may still have, a crisis among some banks,” Morgan Stanley CEO James Gorman told analysts on a conference call after the results were announced.
First Republic Bank, which had nearly $230 billion in assets under its management, was thrown into receivership by the Federal Deposit Insurance Corporation on Monday.
The FDIC then brokered the sale of the bank to JPMorgan Chase, the nation’s largest lender.
The collapse of First Republic, Silicon Valley Bank, and Signature Bank of New York — all of which took place in the last two months — are three of the four largest bank failures in US history.
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