It’s been a week since Morgan Stanley announced that it plans to cut 3,000 jobs, and so far it seems that no one in the bank has heard anything about who will be impacted.
The waiting is excruciating.
“Everybody is worried,” says one London analyst in Morgan Stanley’s investment banking division. “If 3,000 people are going with a focus on sales and trading and IBD, then literally every level will be impacted and literally every team. There aren’t that many of us.”
The cuts come after a few years in which Morgan Stanley strengthened its junior investment banking ranks with external hires from banks like Nomura as deals boomed immediately after the pandemic. When deals collapsed again, the bank first slashed analyst and then associate bonuses and now stands to cut analysts and associates (and VPs and MDs) themselves.
It’s not the only one. Lazard is also making a few hundred investment banking job cuts. Barclays has been trimming again, despite a strong quarter. For most banks, it’s not a question of if – but when. As the chart below, taken from banking intelligence firm Tricumen’s 2022 review, shows, Morgan Stanley should be relatively immune to the need to cut costs. – In 2022 Morgan Stanley’s operating revenues per employee were higher than the average marked by the dotted line. Investment bankers at HSBC, Deutsche Bank and UBS were far less productive on a per head basis.
Operating Revenue / Front Office full time employees (US$) (Investment Banking)
Despite the lingering threat of being laid off, insiders at the bank tell us they’re not looking for jobs yet. And headhunters say they’re not getting Morgan Stanley CVs. This is partly because applying for jobs now is seen as futile, even though banks like PJT, Moelis, Deutsche Bank (despite the chart above) and Greenhill are still hiring.
Headhunters say more cuts are likely later in the summer, and that bonuses this year will be especially bad across the market. “By the end of the year, revenues will hopefully be coming back, so by that stage banks will need to retain as many people as possible,” says one headhunter. No one will be zeroed, but after a year of insipid fees, no one will be happy either.
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