Morgan Stanley plans to cut another 3,000 jobs

Morgan Stanley is making plans to eliminate another 3,000 jobs by the end of June, as the Wall Street bank hunkers down to survive an extended slump in dealmaking.

People familiar with the discussions say senior managers are aiming to eliminate roughly 5 per cent of staff, excluding the customer-facing financial advisers in Morgan Stanley’s prized wealth management division, who will be spared.

The cuts will be spread widely across the rest of the New York-headquartered bank, which employs 82,000 people. The investment banking and securities divisions are expected to be more affected than other parts of the bank.

Banks have already embarked on the steepest round of job cuts since the 2008 financial crisis, and many of the law firms, consultants and accountancy groups that work with them are also letting people go.

Work on initial public offerings and mergers and acquisitions has dried up, as global dealmaking suffered its weakest start to a year in a decade. That leaves institutions that rushed to hire staff to deal with booming activity during the coronavirus pandemic with more people than they need.

For Morgan Stanley, this will be the second round of cuts in less than six months. It eliminated 1,800 staff in December, or just over 2 per cent of its workforce. At that time the bank said no further reductions were expected.

Morgan Stanley declined to comment. The planned round of cuts was first reported by Bloomberg.

Chief executive James Gorman warned last month that investment banking activities “remain very subdued” and predicted revenues might not recover until 2024. The bank’s first-quarter profits fell by a fifth year on year. Gorman took a 10 per cent pay cut for 2022, reflecting the firm’s weaker performance relative to 2021.

Lazard said last week that it planned to reduce its staff by 10 per cent, and Goldman Sachs announced it was cutting 3,200 jobs in January, due partly to the slowdown in deal making and to its efforts to pare back in consumer banking. Those cuts amounted to about 6.5 per cent of Goldman’s staff.

Citigroup, Bank of America and Wells Fargo have all also culled jobs so far this year, as have law firms, including Kirkland & Ellis, and the Big Four accounting firms.