Morgan Stanley to Cut 3,000 Jobs Globally as Recession Fears Delay Deal Making
May 1, 2023
Morgan Stanley, one of the world's leading banks, is planning to cut 3,000 jobs globally by the end of this quarter. The job cuts come as the bank shifts its focus to expenses amid fears of a recession that have slowed down deal making. This move by Morgan Stanley is expected to eliminate about 5% of its workforce, 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, according to sources close to the matter. The job cuts come just months after the firm trimmed about 2% of its workforce. This move by Morgan Stanley reflects the overall trend among major banks, which have reported a decline in fees earned from helping companies with takeovers and raising capital – a proxy for the economy's health – over the past year.
Job cuts across finance have returned since the 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 around 1,600 jobs, while Goldman Sachs Group Inc. eliminated about 3,200 positions in January in one of its most significant cuts ever.
The Federal Reserve’s desire to curb inflation through rate hikes and the ensuing regional-banking tumult have further damped activity, impacting the underwriting and mergers activity. Morgan Stanley's profit has already declined from a year earlier, dragged down by a dropoff in dealmaking, with a 32% decline in its merger advisory and 22% slump in its equity-underwriting business. Analysts are forecasting that revenue from banking fees will be in line with last year's haul - roughly half the $10.3 billion that the bank pulled in during 2021's dealmaking frenzy.
Morgan Stanley's Chief Executive Officer James Gorman said last month underwriting and mergers activity has been subdued and that he does not expect a rebound before the second half of this year or 2024. Ken Jacobs, who runs Lazard Ltd., echoed these sentiments, forecasting that the industry's doldrums will last for the rest of the year. Lazard will eliminate 10% of its workforce, the New York-based firm said last week.
Members of LevelFields received the alert of this event on May 1, 7:55 PM ET
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