Morgan Stanley (NASDAQ:MS), the sixth-largest U.S. bank by assets, has plans to eliminate 1,600 jobs from its institutional securities group and support staff starting this week. These cuts will focus primarily on the more highly paid senior staff in the institutional securities unit, which includes investment banking and trading operations.
Approximately half of these layoffs will be in the U.S., according to the bank. The cuts come after the loss of 4,200 jobs during the first nine months of 2012, and CEO James Gorman’s July announcement that the bank had plans to reduce overall staff by 7% during 2012. More cuts are expected after the current round.
Many of those affected by the current cuts have already been notified.
According to people familiar with this situation, Morgan Stanley plans to promote the fewest number of employees since 2009. This move is anticipated to save millions of dollars annually in managing directors’ salaries.
As this news broke, Morgan Stanley stock fell 3 cents, or 0.15%, from the previous close to end at $19.62 – on a day when most major U.S. market indices rose. But the price of MS has recovered in after-hours and pre-market trading. Over the past year MS climbed over 23%, significantly beating the S&P 500 and Dow Jones Industrial Average.
Like Morgan Stanley, other financial firms have been, and are expected to continue, cutting staff. A few examples from among many include Citigroup Inc. (NYSE:C), which announced last month that it would be cutting 11,000 jobs; and UBS AG which announced in October that it would be releasing 10,000 employees.