Morgan Stanley to cut hundreds of bankers in cost-saving measures led by new CEO Ted Pick. (Reuters)
Morgan Stanley is set to reduce its workforce in the wealth management division, a move attributed to cost-saving initiatives spearheaded by the firm's new CEO, Ted Pick. Reports indicate that several hundred bankers will be affected by the layoffs, including managing directors and other staff not directly engaged with clients. This measure, reported by The Wall Street Journal, comes as the company aims to streamline operations amidst economic challenges.
The planned job cuts are expected to impact less than 1% of the division's workforce, which currently stands at around 40,000 employees. Recent financial reports show stagnant revenue in Morgan Stanley's wealth management unit compared to the previous year, prompting the need for strategic adjustments. Despite its significance as a revenue generator for the bank, the division's medium-term profitability fell short of analysts' expectations.
The expansion of the wealth management unit through acquisitions like Eaton Vance and E*Trade under former CEO James Gorman has been pivotal for Morgan Stanley's revenue diversification. However, the integration of E*Trade led to redundancies, prompting the current cost-saving measures. Following the acquisition, the wealth management unit now oversees approximately $5 trillion in assets, contributing significantly to the bank's overall revenue and reducing its reliance on trading and investment banking.
Ted Pick, who succeeded Gorman as CEO earlier this year, is leading the cost-cutting efforts, marking his first major decision since assuming the role. Gorman, who guided the bank through the aftermath of the 2008 financial crisis, remains executive chairman. Pick, a long-time executive at Morgan Stanley, previously led the institutional securities division.
Morgan Stanley's workforce stood at nearly 80,000 employees by the end of last year, as indicated in its latest quarterly report. The bank's fourth-quarter profits saw a decline compared to the previous year, attributed to various charges including funds allocated to replenish a government deposit insurance fund and legal expenses associated with settling a government investigation.
Despite the challenges, Morgan Stanley's stock price remained stable on Wednesday. The bank continues to pursue its strategic objectives, with Pick reiterating Gorman's target of reaching $10 trillion in assets under management. However, the recent workforce reduction underscores the evolving landscape and the need for adaptability in the financial industry. Morgan Stanley declined to comment on the reported layoffs.
