Morgan Stanley's 'Second Layoff' in Five Months... "Cutting 3,000 Employees"

Concerns of Slump Lead to Downsizing on Wall Street in the US

A second wave of large-scale layoffs is sweeping through Wall Street in the United States. The trend of downsizing continues amid prolonged capital market stagnation caused by high-intensity tightening and economic slowdown.

On the 1st (local time), Bloomberg News, citing sources familiar with the matter, reported that Morgan Stanley, a major U.S. investment bank (IB), is discussing plans to cut 3,000 global employees by the end of the second quarter of this year. This accounts for about 5% of Morgan Stanley's global workforce of 82,000.

This layoff comes just five months after the company laid off 1,600 to 1,800 employees, about 2% of its total workforce, in December last year. At the time of last year's layoffs, Morgan Stanley had stated that there would be no further cuts.

[Image source=Reuters Yonhap News]

According to financial information provider Dealogic, the global M&A volume in the first quarter of this year was $575.1 billion (approximately 761 trillion KRW) as of the 30th of last month, shrinking by 48% compared to the same period last year. This is the lowest level in over a decade since 2012.

Morgan Stanley, which heavily relies on IB sector performance, has been hit hard by the downturn. Its net profit in the first quarter of this year was $2.98 billion (about 4 trillion KRW), a 19% sharp decline from $3.66 billion in the same period last year. In particular, profits from the M&A division dropped by 32%, leading the overall performance decline.

James Gorman, CEO, said last month that due to the recession, stock and bond issuance and mergers and acquisitions (M&A) have severely declined, and he expects it will be difficult for the industry to rebound before the second half of this year or next year.

It is not just Morgan Stanley. Jane Fraser, CEO of Citigroup, also said in an interview with Bloomberg TV on the same day that she is willing to adjust the IB workforce level. Citigroup's IB revenue in the first quarter of this year decreased by 25% compared to the same period last year.

Earlier, JP Morgan began the largest restructuring in its history in January, cutting 3,200 employees. The company launched a company-wide cost-cutting campaign, including halting new investments, selling private jets, and reducing travel expenses. In addition, Bank of America and Wells Fargo have also announced plans to reduce their workforce.

During the COVID-19 pandemic, Wall Street's IBs enjoyed an unprecedented boom fueled by abundant liquidity, rapidly expanding their operations by hiring new employees. However, the shift to high-intensity tightening, soaring costs due to inflation, and concerns over deepening recession have sharply contracted the capital market, turning the rapid expansion into a boomerang.

This content was produced with the assistance of AI translation services.