Morgan Stanley logo seen in New York

Shannon Stapleton | Reuters

As the Wall Street recession deepens in IPOs and mergers this year, involving major advisory firms Morgan StanleyAnd American bank And Citigroup They turned to job cuts in recent weeks.

Morgan Stanley plans to cut nearly 3,000 jobs by the end of June, according to a person familiar with the plans.

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That equates to roughly 5% of the New York-based bank’s workforce when excluding financial advisors and support staff who would be spared in the cuts, the person said. The layoffs are expected to affect banking and trading staff more, according to Bloomberg, which reported the moves earlier.

The historic boom in deals sparked by the pandemic has been followed by a period of bankruptcy that began last year after the Federal Reserve began raising interest rates to put the brakes on an overheating economy. The initial public offerings, debt issuance and mergers that fuel Wall Street have been muted this year. For example, IPO volumes are down 74% from last year, according to Dealogic data.

For Morgan Stanley, the cuts show Wall Street is grappling with expenses as the recession drags on longer than expected. CNBC reported that the bank actually cut about 2% of its workforce in December.

Higher costs and lower revenues

Last month, analysts criticized Morgan Stanley for Posting costs were higher in the first quarter while revenues declined. Expenses at the investment bank and the company’s wealth management division are hurting profit margins in particular.

Bank movements are not isolated. Job cuts in the industry began in September, when Goldman Sachs He reintroduced the practice of executing those he deemed low performers. Almost all of the big firms on Wall Street followed suit, and Goldman itself was forced to resort to another, deeper round of layoffs in January.

In recent weeks, major bank counterparties including Citigroup Bank of America cut a a few hundred All job, relatively surgical cuts that will put the banks in good stead when a pickup in deals finally hits.

Last week, top boutique advisor Lazard It said it plans to cut 10% of its workforce this year. The move was necessary because of the continued slump in deals and wage inflation that has pushed up salaries across banks in recent months.

“Frankly, things are not as good as they were in December or January,” said CEO Ken Jacobs. Tell bloomberg.


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