May 20 (Bloomberg) -- Morgan Stanley, the second-biggest U.S. securities firm, is cutting as many as 25 jobs at its Japan real estate securitization unit, the second round of reductions this year, two people familiar with the matter said.

Eric Ellison, co-head of Morgan Stanley's securitized products group in the nation, is leaving the firm, the people said, declining to be identified as the departure hasn't been made public. Another 20 to 25 bankers and employees were asked to leave last week, they said. Ellison couldn't be reached at his office for comment.

Morgan Stanley cut about 40 jobs at the division, which buys mortgages and packages them into tradable securities, in February, two people familiar with the matter said at the time. The U.S. subprime mortgage crisis has generated at least $19.6 billion of losses at companies in Asia, triggering job cuts at Morgan Stanley, Merrill Lynch & Co. and Mizuho Financial Group Inc.

The company is reviewing staffing levels, including at its local securitization unit, ``to ensure it is right-sized for the environment,'' said Mika Watanabe, a Tokyo-based spokeswoman at Morgan Stanley, declining to comment further.

In the bank's Asia leveraged finance business, managing directors Peter Szekely and Ponty Singh have quit the bank. Nick Footitt, a spokesman for the company in Hong Kong, confirmed today the departure of the two Hong Kong-based bankers.

Morgan Stanley plans to reduce headcount by as much as 5 percent in the next few months after bets on subprime mortgages saddled the bank with a $3.6 billion fourth-quarter loss, it said earlier this month. The firm, which employs about 47,000 people, has already shed at least 3,000 jobs since October.

Nomura Expands

Merrill Lynch in February closed its Japan real estate financing unit, cutting 11 jobs, two people with knowledge of the matter said.

As Wall Street firms pare back Japan operations, some local rivals are expanding. Nomura Holdings Inc., Japan's biggest investment bank, said in February it plans to grow its real estate loan and securitization business in the country.

Tokyo-based Nomura aims to increase its outstanding balance of non-recourse loans and focus on commercial mortgage-backed securities in Japan to take advantage of easing competition from overseas firms, Akira Maruyama, head of the bank's global markets division, said at the time.

Mizuho Securities Co., the investment banking unit of Mizuho Financial, will eliminate about 300 jobs after posting a full- year loss of 418.7 billion yen ($4 billion) amid the global credit market crisis, the Tokyo-based firm said in April.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: May 20, 2008 06:16 EDT