Morgan Stanley laid off about 1,600 employees Tuesday, or roughly 2% of its workforce, CNBC reported.
The staff cuts were not a complete surprise. The bank’s CEO, James Gorman, told Reuters last week “some people are going to be let go.”
That tracks with a warning Gorman levied in October during Morgan Stanley’s third-quarter earnings call. “We’ve learned some things during COVID about how we can operate more efficiently,” Gorman said at the time, according to Bloomberg. “So that’s something the management team is working on between now and the end of the year.”
Last week, Gorman said Morgan Stanley would be “making some modest cuts all over the globe.” In line with that, Reuters reported last month the bank was considering eliminating roughly 50 investment-banking jobs based in the Asia-Pacific region.
“In many lines of business, that’s what you do after many years of growth,” Gorman said last week, referring to job cuts.
Indeed, Morgan Stanley’s workforce has swollen by 34% since the first quarter of 2020, according to CNBC. But much of that stems from the bank’s 2020 acquisitions of E*Trade and Eaton Vance.
Gorman didn’t detail, last week or in October, the breadth of expected layoffs. Banks, led by Goldman Sachs, have telegraphed since July that large-scale staff cuts were coming this year. Goldman said then that it would reinstate annual performance reviews, a tool to target the bank’s less productive employees. It followed up in September by cutting 25 jobs in China — presumably the first of hundreds of layoffs for the bank this year.
Citi and Barclays followed suit last month, cutting roughly 50 and 200 jobs, respectively. And Credit Suisse shed the first of roughly 2,700 employees it expects to eliminate this year in a wider revamp. Other banks, such as Wells Fargo, JPMorgan Chase and, again, Citi, have focused layoffs thus far this year on the mortgage-lending sector.
A spokesperson for Morgan Stanley declined to comment to CNBC on Tuesday’s layoffs. Financial advisers, however, appear to be one category untouched by the cuts, sources told the network.
Goldman, BofA weigh in
Other banks, too, signaled Tuesday the likelihood of future cuts.
“You have to assume that we have some bumpy times ahead,” Goldman Sachs CEO David Solomon told Bloomberg on Tuesday. “You have to be a little more cautious with your financial resources, with your sizing and footprint of the organization. … That might also come from pruning in certain areas.”
The bank signaled this summer that it would slow its hiring — a tactic adopted by a pair of other finance giants.
Asset manager BlackRock said Tuesday it would freeze most of its hiring, according to Reuters. Bank of America CEO Brian Moynihan, meanwhile, said his bank would be “more careful” in how it seeks talent, opting to prioritize paying and promoting existing employees.
“We want to take care of our own first — that’s the principle,” Moynihan told Bloomberg on Tuesday.
The downturn in hiring comes as fewer employees are leaving ahead of a possible recession. Moynihan, however, eschewed the idea that layoffs were imminent.
“The reality is you can manage headcount if you just get ahead of it and start working on it,” he said.
Morgan Stanley’s cuts Tuesday may represent a 180-degree turn from the beginning of the pandemic. Gorman was ill with COVID himself when he announced his company would not cut jobs in 2020. Several other big-bank CEOs, including Moynihan, echoed that promise.
2022 is clearly shaping up differently.
“Reality is starting to set in,” Lazard CEO Kenneth Jacobs said Wednesday, according to Reuters.