Wall Street major Morgan Stanley (MS.N) is likely to begin a fresh round of job cuts around the world in the coming weeks, three people familiar with the plan said, as the dealmaking business takes a hit owing to rocketing inflation and an economic slowdown.
In Asia Pacific, the bank has drafted up a list of employees deemed redundant, who will largely come from teams that focus on China-related business, two of the sources said. All refused to be identified as the information is private.
Some of the layoffs will come from capital market teams in mainland China and Hong Kong, and most of the rest are expected to be from other teams managing China business, both offshore and onshore, the third source said.
One of the sources said the bank’s 30-plus technology investment banking team in Asia Pacific will also be hit by the layoffs.
The layoffs in Asia Pacific will be larger compared to the bank’s annual staff losses from natural attrition in the region, the three sources said, adding that a final decision on the scale of the cuts is yet to be reached. Global cuts will be made almost at the same time, they added.
A fourth source said the bank has yet to determine the size or timing of any cuts, adding that layoffs are not looming. Any cuts would total a low-single-digit percentage of staff across the world, this person said.
Morgan Stanley, which had 81,567 workers worldwide at the end of the previous quarter, according to a company filing, would not comment for the story. With prospects for arranging and financing deals diminishing, some investment banks are stepping up plans to reduce their workforce.
Goldman Sachs (GS.N) laid off staff in September after discontinuing the annual practice for two years during the pandemic, Reuters has reported. Deutsche Bank (DBKGn.DE) also cut its workforce in October in the origination and advisory segments of its investment banking unit.
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Morgan Stanley’s workforce reduction plans in Asia come as China’s stringent COVID-19 curbs are weighing down its economy, which has caused damage to capital markets and merger and acquisition (M&A) activity.
Hong Kong, the preferred IPO venue for Chinese companies, has managed $10.77 billion of listings so far in 2022, the smallest level since 2017, compared with $37.7 billion for the same period a year ago, according to Refinitiv figures.
M&A transaction values involving China fell by 35% year-on-year to $266 billion in the first three quarters of 2022, to the lowest level since 2013, Refinitiv data showed, although it continues to be Asia’s biggest deals market.
Morgan Stanley in October posted a 30% drop in third-quarter profit, failing to reach analysts’ estimates as a slowdown in global dealmaking hit its investment bank business. It indicated that some cost-cutting actions were on the radar.
“We’re looking at headcount,” Chairman and Chief Executive James Gorman said in a conference call in October, without giving details.
“You’ve got to take into account the rate of growth we’ve had in the last few years, and we’ve learned some things through COVID about how we can operate more efficiently.”
Gorman is currently in Hong Kong at a high-profile financial summit intended for re-opening the city to international investors after almost three years of stringent COVID curbs. He said at a panel discussion Wednesday that the greatest risk the world currently experienced was the high level of inflation.
Morgan Stanley has dropped four places to rank 14th in the Asia Pacific, ruling out Japan, investment banking fee league table so far in 2022, netting in $329 million with a 1.4% market share, as per Refinitiv data.
