Morgan Stanley to Slash 1,600 Jobs in 2023 Amid Market Slowdown

Morgan Stanley is set to reduce its global workforce by approximately 2%, equating to around 1,600 positions, focusing on underperforming staff. This move aligns the bank with peers like Goldman Sachs, Citigroup, and Barclays, who have resumed annual performance-based layoffs after a pandemic-driven surge in dealmaking paused such cuts.

Highlights

• Approximately 1,600 employees to be laid off at Morgan Stanley.
• Higher interest rates have significantly slowed dealmaking activity.
• Investment banker bonuses may decline by up to 30% this year.

“After years of growth, some workforce reductions are necessary,” stated Morgan Stanley CEO James Gorman in a recent interview. The investment banking sector has seen revenues drop sharply, with the top five U.S. banks experiencing a 47% decline in the first nine months of 2022 due to rising interest rates disrupting deals. The third quarter alone saw deal values fall by 64%, and deal volume decrease by 36% compared to the previous year.

These workforce cuts coincide with projections of a significant reduction in bonuses for investment bankers, potentially falling by as much as 30%. A recent report by Johnson Associates indicated that bonuses for underwriters might plummet by 45%.

Jefferies’ CEO Rich Handler and President Brian Friedman recently communicated to their team that this compensation season will be notably challenging across the industry.

Since early 2020, Morgan Stanley's employee count grew by 34%, reaching over 81,000 in the third quarter. Despite the widespread job reductions, financial advisors are expected to remain unaffected due to their role in generating revenue through client asset management, according to insiders.

Over the past year, Morgan Stanley’s stock price has declined by 13%, mirroring a similar 11% drop in the NYSE Composite Index.

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