Morning Coffee: So, now Morgan Stanley is cutting 3,000 jobs too. The bank CEO who gets up at 4.30am and works 12 hours in the office
Although Lazard's cuts are numbered in the 100s and won't amount tomuch at all in London, there was much in last week's Lazard investor call to give junior investment bankers the fear. — The «deterioration» in the external environment, the bald statement that there's no sign of «bouncing back,» the admission that higher junior banker salaries are causing a problem. And now there are signs that Morgan Stanley feels the same.
Bloomberg reports that Morgan Stanley is preparing to cut 3,000 people, or 3.7% of its 82,000 workforce. Employees in the wealth management division will be spared; investment bankers and traders will bear the brunt of the blow. The new cuts come after Morgan Stanley cut 1,600 people before Christmas. But the bank will still have trimmed less than 7% of its workforce, compared to cuts of 10% at Lazard. The latest cuts will put Morgan Stanley on a par with Goldman Sachs, which cut 6.5% of its people in January.
Morgan Stanley's M&A bankers had a feeble first quarter, with revenues declining 32% year-on-year, second only to the 57% decline in M&A revenues at Credit Suisse. Morgan Stanley's revenues in all other areas (fixed income trading, equities trading, equity and debt capital markets) also fell, but not by as much. Profits in its institutional securities business, which houses the investment bank were down by a third year-on-year.
Pre-Christmas cuts aside, it's been a while since Morgan Stanley culled quite so many staff. When it removed 1,200 people in 2015, around 470 of them came out of its fixed income trading division. This time, the cuts are likely to hit investment bankers hardest. The Financial Times notes that CEO James Gorman said investment banking activity remains «very subdued» and
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