Morgan Stanley Said to Cut 1,600 Investment-Banking Jobs

Jan. 9 (Bloomberg) -- Bloomberg's Erik Schatzker and Stephanie Ruhle report that Morgan Stanley is cutting 1,600 investment banking jobs, nearly 6 percent of the unit. They speak on Bloomberg Television's "Market Makers."

Morgan Stanley, the sixth-largest U.S. bank by assets, plans to eliminate about 1,600 jobs from its investment bank and support staff in coming weeks, a person with direct knowledge of the matter said.

The cuts total about 6 percent of the New York-based company’s institutional securities group, which includes investment banking and trading units, and support staff, the person said, asking not to be identified because the decision hasn’t been made public. About half the reductions will be in the U.S., the person said.

Morgan Stanley reduced staff by about 4,200 people in the first nine months of last year through job cuts and unit sales, after saying in December 2011 it would trim 1,600 jobs. Chief Executive Officer James Gorman, 54, has pledged to lower costs as return on equity remains below the bank’s cost of capital.

All levels of employees will be affected, with a focus on senior workers, the person said. The cuts will be distributed across all investment banking and trading units, and some workers have already been notified, the person said.

Morgan Stanley, which had 57,726 employees as of Sept. 30, has laid out a plan to cut $1.4 billion of annual expenses by next year. The firm produced a return on equity of about 5 percent in the first nine months of 2012, excluding charges related to its own credit spreads. That’s below Gorman’s target of 15 percent.

‘Bold Fix’

Daniel Loeb’s Third Point LLC said today that it bought a stake in Morgan Stanley and that the firm’s shares may double. The New York-based hedge fund called for a “bold fix” for the bank’s fixed-income trading business that includes reducing costs in the unit.

Morgan Stanley fell 3 cents, or 0.2 percent, to close at $19.62 in New York. The shares climbed 26 percent in 2012, and trade at about 65 percent of book value, a measure of the firm’s assets minus liabilities.

Citigroup Inc. said last month it would cut 11,000 jobs and pull back from some emerging-market nations. UBS AG announced in October that it would fire 10,000 workers and largely exit fixed-income trading.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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