According to a Reuters report quoting three people with knowledge of the plan, Wall Street giant Morgan Stanley will likely begin a new round of global layoffs in the coming weeks as dealmaking suffers as a result of rising inflation and the global economic downturn.
According to two of the sources, the bank has created a list of employees in Asia Pacific who are deemed redundant; these employees will primarily come from teams that concentrate on China-related business. All chose not to be identified because the information is private.
The third source stated that some of the reductions will affect the capital markets teams in Hong Kong and mainland China, while the majority of the remaining reductions are anticipated to affect other teams with a focus on China business, both onshore and offshore.
The bank's 30-plus technology investment banking team in Asia Pacific, according to one of the sources, will also be impacted by the layoffs.
The three sources stated that the cuts in Asia Pacific will be greater than the bank's annual staff losses due to natural attrition in the region, but that a final decision on the size of the cuts has not yet been made.
They added that global cuts would occur at the same time.
A fourth source stated that no decisions have been made by the bank regarding the scope or timing of any layoffs and added that no layoffs are imminent. This person stated that any layoffs would affect a low-single digit percentage of employees worldwide.
According to a company filing, Morgan Stanley had 81,567 employees worldwide at the end of the third quarter. The company declined to comment for the story.
Some investment banks are putting more weight behind plans to lay off employees as opportunities for arranging and financing deals dwindle.
According to Reuters, Goldman Sachs resumed annual job cuts in September after postponing them for two years due to the pandemic. In its investment banking division's origination and advisory divisions, Deutsche Bank also made staff reductions last month.
The tight COVID-19 restrictions on China are having a negative impact on its economy, which has hurt the capital markets and merger and acquisition (M&A) activity. Morgan Stanley has announced plans to cut headcount in Asia.
In comparison to $37.7 billion at this time last year, Hong Kong, the preferred IPO venue for Chinese companies, has handled $10.77 billion in listings so far in 2022, the fewest since 2017.
Despite remaining Asia's largest deals market, M&A transaction values involving China fell by 35% year over year to $266 billion in the first nine months of the year, the lowest level since 2013.
Last month, Morgan Stanley announced a third-quarter profit decline of 30%, missing analysts' expectations as a slowdown in global dealmaking hurt its investment bank business. It suggested that some cost-cutting measures were under consideration.
"We're looking at headcount," Chairman and Chief Executive James Gorman said in a conference call last month, without providing details.
"You've got to take into account the rate of growth we've had in the last few years, and we've learned some things through COVID about how we can operate more efficiently."
At a prominent financial summit in Hong Kong, Gorman is working to end the city's nearly three-year closure to foreign investors due to COVID restrictions.
He stated during a panel discussion on Wednesday that the high rate of inflation was the biggest risk the world was currently facing.
According to Refinitiv data, Morgan Stanley has dropped four positions this year to take up position 14 in the Asia Pacific, excluding Japan, investment banking fee league table, earning $329 million with a 1.4% market share.
(Source:www.reuters.com)
According to two of the sources, the bank has created a list of employees in Asia Pacific who are deemed redundant; these employees will primarily come from teams that concentrate on China-related business. All chose not to be identified because the information is private.
The third source stated that some of the reductions will affect the capital markets teams in Hong Kong and mainland China, while the majority of the remaining reductions are anticipated to affect other teams with a focus on China business, both onshore and offshore.
The bank's 30-plus technology investment banking team in Asia Pacific, according to one of the sources, will also be impacted by the layoffs.
The three sources stated that the cuts in Asia Pacific will be greater than the bank's annual staff losses due to natural attrition in the region, but that a final decision on the size of the cuts has not yet been made.
They added that global cuts would occur at the same time.
A fourth source stated that no decisions have been made by the bank regarding the scope or timing of any layoffs and added that no layoffs are imminent. This person stated that any layoffs would affect a low-single digit percentage of employees worldwide.
According to a company filing, Morgan Stanley had 81,567 employees worldwide at the end of the third quarter. The company declined to comment for the story.
Some investment banks are putting more weight behind plans to lay off employees as opportunities for arranging and financing deals dwindle.
According to Reuters, Goldman Sachs resumed annual job cuts in September after postponing them for two years due to the pandemic. In its investment banking division's origination and advisory divisions, Deutsche Bank also made staff reductions last month.
The tight COVID-19 restrictions on China are having a negative impact on its economy, which has hurt the capital markets and merger and acquisition (M&A) activity. Morgan Stanley has announced plans to cut headcount in Asia.
In comparison to $37.7 billion at this time last year, Hong Kong, the preferred IPO venue for Chinese companies, has handled $10.77 billion in listings so far in 2022, the fewest since 2017.
Despite remaining Asia's largest deals market, M&A transaction values involving China fell by 35% year over year to $266 billion in the first nine months of the year, the lowest level since 2013.
Last month, Morgan Stanley announced a third-quarter profit decline of 30%, missing analysts' expectations as a slowdown in global dealmaking hurt its investment bank business. It suggested that some cost-cutting measures were under consideration.
"We're looking at headcount," Chairman and Chief Executive James Gorman said in a conference call last month, without providing details.
"You've got to take into account the rate of growth we've had in the last few years, and we've learned some things through COVID about how we can operate more efficiently."
At a prominent financial summit in Hong Kong, Gorman is working to end the city's nearly three-year closure to foreign investors due to COVID restrictions.
He stated during a panel discussion on Wednesday that the high rate of inflation was the biggest risk the world was currently facing.
According to Refinitiv data, Morgan Stanley has dropped four positions this year to take up position 14 in the Asia Pacific, excluding Japan, investment banking fee league table, earning $329 million with a 1.4% market share.
(Source:www.reuters.com)
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