Investment banking and financial services Morgan Stanley plans to lay off a total of 3,000 employees at its global plant by the end of next June, according to US press reports.
The adjustment would equate to about 5% of the bank’s workforce, excluding financial planners and support staff, who will be spared the cuts. They add to another 2% cut – equivalent to 1,600 positions – announced last December.
In this sense, according to the news agency, the layoffs should have a greater impact on the multinational’s banking and commercial personnel. Bloomberg and the specialized channel CNBC.
Morgan Stanley was particularly affected by the turnaround in economic conditions, as was the rest of the financial sector.
In a situation that represents a reversal of the “boom” experienced during the pandemic, the rate hikes by the Federal Reserve (FED) have caused a sharp collapse in M&A activity, corporate capital rounds and IPOs, affecting the bank’s business.
Added to all this is the fear of a possible recession in the United States in the coming months, which motivates companies to adjust their spending.
This measure comes amid widespread corporate layoffs and shortly after the announcement of first-quarter results, in which Morgan Stanley reported net income of $2,980 million (€2,717 million), a 19% less than in the first three months of 2022.
Between January and March of this year, Morgan Stanley had revenues of $14.517 million, a year-on-year decline of 2%. The company employed more than 82,000 people at the end of last year
So far this year, the company’s shares are up 3.42%. While they peaked at $100 a share in February, they’re now below $86.
Morgan Stanley, in this sense, was not the only one affected, given that other banks such as Goldman Sachs -with 3,200 layoffs in January-, Citigroup and Bank of America have also announced staff cuts or freezes in recent months, reflecting the particular vulnerability of a cyclical sector such as the banking sector.
As Morgan Stanley CEO James Gorman indicated last month, merger and acquisition activity in the corporate sector is not expected to resume until before the second half of 2024.
Similarly, on Monday, the CEO of Citigroup, Jane Fraser, anticipated adjustments in the positions of her investment bank, while stating that “there is a long-term game in that area”, regardless of the difficult context current.
The banking sector, hit in March by the bankruptcy of US banks Silicon Valley Bank and Signature Bank, is going through a period of severe turbulence.
US authorities on Monday took control of regional bank First Bank Republic and sold a majority stake to JPMorgan Chase, in what is the second largest bank failure in US history.
Source: Clarin
