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Morgan Stanley (MS) to Cut Jobs in IB Division Amid Slowdown
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The continued slowdown in the investment banking (IB) business has prompted Morgan Stanley (MS - Free Report) to initiate another round of job cuts. The company has decided to cut 3,000 jobs in the second quarter of 2023, according to a source familiar with the matter.
Amid the tough economic environment, a slowdown in deal-making has prompted MS to consider its headcount.
Similar to the fourth quarter of 2022, the overall IB business performance was weak in first-quarter 2023. A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions.
Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances dried up. Bond issuance volume witnessed a decline, too, as investors turned pessimistic.
Hence, Morgan Stanley’s equity underwriting fees decreased 22% from the prior-year quarter and fixed-income underwriting declined 6%. Advisory fees were down 32%. Therefore, total IB fees dipped 24% year over year.
Last month, Morgan Stanley’s chief finance officer, Sharon Yeshaya, said that “expense management” was a priority, given the broader market uncertainty and elevated inflation.
In December, Morgan Stanley’s CEO, James Gorman, said that the bank would make “modest” cuts worldwide, but he did not give an exact number.
Over the past six months, shares of MS have gained 1.7% against the industry’s decline of 13.9%.
Image Source: Zacks Investment Research
Currently, Morgan Stanley carries a Zacks Rank #4 (Sell).
Similar to Morgan Stanley, Wall Street firms, including Bank of America (BAC - Free Report) and Citigroup Inc. (C - Free Report) , have been reducing workforce in their IB and wealth management divisions.
This March, Citigroup initiated a round of job cuts, cutting hundreds of jobs across the firm, which accounted for less than 1% of its total workforce. According to people familiar with the matter, who asked not to be identified, the company’s IB division, its operations and technology organization, and the U.S. mortgage-underwriting division were among those affected.
In its investment banking division, Citigroup was struggling because of the industry-wide slowdown in deal-making. Citigroup recorded a 53% decline in IB revenues in 2022, with additional declines in the first quarter of 2023.
In its mortgage division, the company was grappling with reduced mortgage demand because of rising prices and a rapid increase in mortgage rates.
Likewise, in February, it was reported that Bank of America was planning to cut jobs in its investment bank. The cuts are expected to have affected less than 200 bankers globally.
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Morgan Stanley (MS) to Cut Jobs in IB Division Amid Slowdown
The continued slowdown in the investment banking (IB) business has prompted Morgan Stanley (MS - Free Report) to initiate another round of job cuts. The company has decided to cut 3,000 jobs in the second quarter of 2023, according to a source familiar with the matter.
Amid the tough economic environment, a slowdown in deal-making has prompted MS to consider its headcount.
Similar to the fourth quarter of 2022, the overall IB business performance was weak in first-quarter 2023. A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions.
Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances dried up. Bond issuance volume witnessed a decline, too, as investors turned pessimistic.
Hence, Morgan Stanley’s equity underwriting fees decreased 22% from the prior-year quarter and fixed-income underwriting declined 6%. Advisory fees were down 32%. Therefore, total IB fees dipped 24% year over year.
Last month, Morgan Stanley’s chief finance officer, Sharon Yeshaya, said that “expense management” was a priority, given the broader market uncertainty and elevated inflation.
In December, Morgan Stanley’s CEO, James Gorman, said that the bank would make “modest” cuts worldwide, but he did not give an exact number.
Over the past six months, shares of MS have gained 1.7% against the industry’s decline of 13.9%.
Image Source: Zacks Investment Research
Currently, Morgan Stanley carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar to Morgan Stanley, Wall Street firms, including Bank of America (BAC - Free Report) and Citigroup Inc. (C - Free Report) , have been reducing workforce in their IB and wealth management divisions.
This March, Citigroup initiated a round of job cuts, cutting hundreds of jobs across the firm, which accounted for less than 1% of its total workforce. According to people familiar with the matter, who asked not to be identified, the company’s IB division, its operations and technology organization, and the U.S. mortgage-underwriting division were among those affected.
In its investment banking division, Citigroup was struggling because of the industry-wide slowdown in deal-making. Citigroup recorded a 53% decline in IB revenues in 2022, with additional declines in the first quarter of 2023.
In its mortgage division, the company was grappling with reduced mortgage demand because of rising prices and a rapid increase in mortgage rates.
Likewise, in February, it was reported that Bank of America was planning to cut jobs in its investment bank. The cuts are expected to have affected less than 200 bankers globally.