As Morgan Stanley's layoffs begin, here's who's safe and who's not
The long awaited event appears to be unfolding. Morgan Stanley isn't responding to requests to comment, but multiple sources say that this is the week that the bank has tabled its cuts and that today is the day they are beginning.
To recap, Morgan Stanley is thought to be cutting 3,000 jobs, with investment bankers and traders most exposed to the scythe. Bloomberg reported previously that Morgan Stanley's wealth management staff should be immune to being cut. It also reported that Morgan Stanley was considering laying off 7% of its investment bank jobs in Asia.
Outside of Asia and beyond underperformers, the Morgan Stanley people most exposed to the cuts are likely to be both very junior bankers who can easily be replaced by the coming class of graduate hires and more senior bankers who are in non-revenue generating (or low-revenue generating) management positions.
"It's a bad time to be a managing producer unless you're also a good producer," says the head of one New York search firm. "If you're not making money yourself, you will be pushed out now. The worst position to be in is that of the non-producing manager. If you're - say - head of North American sales trading now, you need to be talking to your clients and managing the team, or you're out."
Revenues in Morgan Stanley's institutional securities unit (investment bank) fell 11% year-on-year in the first quarter and profits were down 33%. The decline was most dramatic in M&A (down 32%) and least dramatic in debt capital markets (down 6%).
Nonetheless, it may be location rather than recent revenue trends that predicts immunity to Morgan Stanley's cuts. The US bank has already declared its intention of increasing its Paris headcount from 300 to 500, and cutting staff in the French capital is notoriously complicated. One insider there says it's usually easier simply to pay French people to leave of their own accords, in the style of SocGen, and that cuts in Paris are therefore unlikely.
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