November 28, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Morgan Stanley mulls reducing Asian investment banking staff — Morgan Stanley (NYSE:MS) is reportedly considering cutting around 40 roles in its Asia-Pacific investment banking department as part of its ongoing mass layoffs.

The bank is expected to begin communicating with affected bankers this week, according to Bloomberg News, with China expected to be the hardest hit. The move comes as deteriorating relations between China and the U.S., as well as weaker economic growth, have curbed dealmaking. The final figure could be higher, given that Morgan Stanley has already cut 50 roles in the region last year.

The bank has struggled this year as M&A has plummeted amid macroeconomic headwinds, but the worsening relationship between the U.S. and China is also to blame. The Asia-Pacific region had contributed 13% of the bank’s net revenue over the last five years, hitting $6.7 billion in 2022. However, global dealmaking has ground to a halt in the face of unfavorable economic conditions and escalating tensions between China and the West.

The cuts are part of Morgan Stanley’s plan to reduce around 3,000 jobs globally by the end of the second quarter of 2021. The bank has employed a larger China team in Hong Kong than most of its rivals, making it vulnerable as deal activity slows.

In addition to the geopolitical challenges faced by Morgan Stanley, the banking sector as a whole is grappling with an uncertain economic outlook due to the ongoing COVID-19 pandemic. Banks are bracing for a wave of loan defaults as businesses struggle to stay afloat amid lockdowns and social distancing measures. This uncertain environment has led many financial institutions to tighten their belts and assess their workforce needs.

If Morgan Stanley goes ahead with these layoffs, it will join several other major banks that have resorted to job cuts in recent months. HSBC (LON:HSBA) announced plans to cut 35,000 jobs worldwide earlier this year, while Deutsche Bank (ETR:DBKGn) is in the process of cutting 18,000 jobs as part of a major restructuring effort.

The banking industry is facing an increasingly challenging environment, with low interest rates, economic uncertainty, and geopolitical tensions all contributing to a slowdown in deal activity. As such, it is likely that more banks will consider layoffs and other cost-cutting measures to weather the storm.

–This article was written with the assistance of AI

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