Morgan Stanley will eliminate 1,200 jobs, including 470 fixed-income and commodities traders and salespeople, as Wall Street’s outlook for its debt-markets businesses dims.
The cuts, which comprise about 2% of Morgan Stanley’s total workforce, will also target hundreds of back-office employees who support the New York firm’s fixed-income division, a person familiar with the matter said. The Wall Street firm will take a $150 million charge in the fourth quarter to cover severance expenses, a Morgan Stanley spokesman said
A vast majority of the cuts will occur in London and New York, with fewer than 100 so-called front office, revenue-generating positions eliminated at the firm’s Asia offices, people familiar with the matter said.
“This will result in businesses that are critically and credibly sized for the current market, while maintaining the ability to deliver for our clients across products and geographies,” Morgan Stanley executives Colm Kelleher, president of Morgan Stanley’s investment-banking and securities businesses, and Edward Pick, who heads trading, wrote Tuesday in a memorandum to employees.
Morgan Stanley posted a 42% drop in fixed-income trading revenue during the third quarter. During a Nov. 17 appearance at an investor conference, Mr. Kelleher moved to damp expectations for a quick turnaround. “I don’t think Q4 is going to be much better,” he said.
“What I don’t know yet is: What is the steady run rate of what we think fixed income should be? What is that number, and how do you size?” Mr. Kelleher said. “But clearly, you have to adjust in accordance with market conditions for the foreseeable future.”
Morgan Stanley has no plans to exit any of the major fixed-income trading businesses, which include corporate, government and mortgage bonds as well as currencies and commodities, the person said. Some desks, like base-metals trading, will be scaled back, the person said.
Morgan Stanley’s shares jumped last week as news of looming cuts reached investors.
The firm tapped Mr. Pick, its head of equity trading, to run the fixed-income business as well in early October.
The bank also said Tuesday that Alistair Darling will join its board at the beginning of next year. Mr. Darling, who is 62 years old, is a former member of the British Parliament.
As U.K. Treasury chief, Mr. Darling had a front-row seat to one of the most dramatic moments in recent Wall Street history: The failed rescue of Lehman Brothers Holdings Inc., whose collapse in September 2008 deepened the financial crisis. According to accounts of Lehman’s final days, Mr. Darling was in contact with U.S. Treasury Secretary Henry Paulson over a potential sale of Lehman to U.K. lender Barclays PLC. Mr. Darling expressed concerns over the risks the deal could bring to the U.K. and the firm ultimately filed for bankruptcy.
—Julie Steinberg contributed to this article.
news source & image: wsj.com
