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Morgan Stanley could cut more jobs as economic problems continue

By Nithya Bose in Employment News, posted May 18, 2023

Morgan Stanley is considering further layoffs in the Asia-Pacific investment banking division as part of its o mass layoffs.

Reports suggest that around 40 positions may be affected, with the actual number potentially higher.

The China team is expected to be the worst hit following the reduction of 50 roles in the region last year.

The investment bank has faced difficulties this year due to declining M&A activity amidst macroeconomic challenges.

In early May, Morgan Stanley revealed plans to cut 3,000 positions worldwide, which accounts for approximately four percent of its headcount.

Prior to the announcement, the bank had already laid off two percent of its employees at the end of the previous year.

While other banks had a successful Q1 earnings season, Morgan Stanley saw a 19 percent decrease in profit to $3 billion and a 24 percent drop in investment banking revenue.

CEO James Gorman acknowledged the constraints on investment banking activity but expressed confidence in the bank's ability to deliver long-term value to shareholders.

Over the past five years, the Asia-Pacific region has contributed 13 percent of Morgan Stanley's net revenue, reaching $6.7 billion in 2022.

However, global dealmaking has stalled due to unfavorable economic conditions and escalating tensions between China and the West.

There are discussions of potential restrictions on American investment in Chinese businesses, and concerns about China's intentions regarding US data, exemplified by the TikTok US Congress hearing.

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Despite these challenges, Morgan Stanley recently announced plans to increase its workforce in France by 200, bringing the total number of employees in the country to 500.

Many banks have pursued similar measures in response to Brexit, making the European market more appealing.

Goldman Sachs, another major investment banking firm, is also implementing structural changes and conducting mass layoffs.

It reported a 26 percent decline in investment banking fees for Q1 and previously announced a reduction of 3,200 positions.

Likewise, Citigroup disclosed plans to cut 1 percent of its workforce in March, potentially affecting hundreds of employees.

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