Morgan Stanley to cut 6 percent of securities unit staff: sources

Wed Jan 9, 2013 12:09pm EST
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By Lauren Tara LaCapra

(Reuters) - Morgan Stanley (MS.N: Quote) plans to cut 6 percent of its institutional securities staff starting this week, two people familiar with the matter said on Wednesday, the latest sign of a pullback on Wall Street as revenue from trading and deal-making remains in the doldrums.

Combined with related job cuts among support staff, Morgan Stanley's workforce reduction will amount to 1,600 people, said the sources, who were not authorized to speak publicly about the matter.

Morgan Stanley chief Executive James Gorman has pledged to reduce costs, and said in July that he planned to reduce overall staff at the firm by 7 percent in 2012. The new job cuts - which target sales, trading and investment banking staff as well as workers who support those operations in areas like technology - come in addition to that plan, the sources said.

"This continues the steady drumbeat of negative news from banks," said Greg Cresci, a Wall Street recruiter with New York-based Odyssey Search Partners. "It's hard to tell where the bottom is, given how many banks have made similar announcements."

For the past two years, Morgan Stanley and other banks have been dealing with a revenue drought in their trading and investment banking businesses as activity remains weak, particularly in once-lucrative trading areas. New regulations that ban certain kinds of trading or make it more costly are also prodding banks to exit businesses and reduce staff.

Morgan Stanley's latest cuts come in addition to workforce reductions that took place or were announced last year across the industry.

Its main rival, Goldman Sachs Group Inc (GS.N: Quote), cut 700 jobs during the first nine months of 2012 as part of a plan to reduce annual expenses by $1.9 billion. Analysts expect the firm's compensation pool to be much lower in the fourth quarter.

Citigroup Inc (C.N: Quote) announced plans last month to cut 11,000 jobs, including some in investment banking and trading, to save $1.1 billion in annual expenses. Credit Suisse Group AG CSGN.VX is also cutting securities jobs to reach an annual cost-savings target of 1 billion Swiss francs ($1.1 billion), while UBS AG UBSN.VX said it would cut 10,000 jobs and exit the fixed-income trading business amid losses and new regulations.   Continued...

Morgan Stanley's New York headquarters are seen at the corner of 48th Street and Broadway in New York May 22, 2012. REUTERS/Andrew Burton