Top US financial services firm Morgan Stanley is all set to cut around 3,000 positions by the end of June, reports US TV network CNBC. This will be the second round of layoffs in the US-based multinational company in the last six months.
According to Bloomberg, the layoffs are expected to have the greatest impact on banking and trading staff. The layoffs will affect around 5% of the bank’s employees. But financial advisors and support staff will be exempt from the reduction, say reports.
Wall Street’s biggest firms are shedding jobs as the industry grapples with a slump in public offerings and mergers this year. As per reports, IPO volumes are down 74% compared to last year, while mergers and debt issuance have remained muted.
From boom to bust
This downturn is a significant change from last year’s boom in deals ignited by the pandemic, followed by a bust that began after the Federal Reserve started raising rates to cool an overheating economy.
Wall Street’s woes have been exacerbated by rising costs and falling revenue, with Morgan Stanley facing criticism from analysts for posting higher costs in the first quarter as revenue dwindled. Investors are wary of the reduced profit margins due to expenses in the firm’s investment bank and wealth management division.
Morgan Stanley’s moves are not isolated. The industry began to cut jobs from September 2022, when Goldman Sachs started culling low-performing staff. After other big Wall Street businesses followed suit, Goldman had to resort to yet another, more extensive round of layoffs in January.
In recent weeks, large banks such as Citigroup and Bank of America have also slashed a few hundred positions each, claiming that this will position them well when a resurgence in deals occurs.
Ultimately, Wall Street’s future remains uncertain, but the current slump is a reminder that the financial industry is subject to the same boom-and-bust cycles as any other. As firms like Morgan Stanley cut jobs, employees across the ‘street’ are curious about the industry’s future.
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