Jan. 9 (Bloomberg) -- Patrick Lynch, the head of European credit sales and trading at Morgan Stanley, was among a number of departures at the bank in London, two people with knowledge of the matter said.
Fernando Ortega, the head of emerging-market fixed-income sales and trading, Amanda Webb on the securitization sales desk and Janko Nedic, a salesman for collateralized loan obligations, also left, two other people said separately.
Morgan Stanley, the sixth-biggest U.S. lender by assets, said last month it planned to cut 1,600 jobs amid an industrywide drop in revenue from investment banking and trading. The figure amounts to about 2.6 percent of the New York-based bank’s employees at the end of September, and the job losses will take place in the first quarter at all levels.
“Morgan Stanley after 2008 really hasn’t come back,” said Jason Kennedy, the chief executive officer of London-based recruiter the Kennedy Group. “The big salaries are so high at that level. They’ve got to thin out and they’re cleaning house of the old regime.”
Lynch didn’t reply to a text message to his cell phone. Calls to Webb, Nedic and Ortega at Morgan Stanley’s offices weren’t returned.
Sebastian Howell and Hugh Fraser, spokesmen for the U.S. bank in London, declined to comment.
Lynch, 42, moved to London from the bank’s high-yield desk in New York to help build Morgan Stanley’s European distressed debt group before the subprime crisis. He was relocated to Hong Kong in 2007 to head the Asian corporate credit group, before coming back to London in 2008.
Morgan Stanley’s revenue from trading and investment-banking dropped 36 percent in the third quarter from the previous three months, excluding accounting adjustments. The bank lost 34 percent of its market value since July 21, with its shares ending last week at $15.90.
“We will continue to see job cuts in the banking sector this year as cost control will be one of the top priorities,” said Simon Adamson, an analyst at CreditSights Inc. in London. “Investment banking will be a high-risk area because it’s facing cyclical pressure and a permanent shift in its business model.”
The cost of insuring Morgan Stanley’s debt more than doubled in the same period, with credit-default swaps tied to the lender jumping to 380 basis points, from 169, according to CMA. The contracts climbed to a three-year high of 583 Oct. 3.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.