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Morgan Stanley, one of the world's leading investment banks, is reportedly planning to eliminate approximately 3,000 jobs in the second quarter of 2023. This will be the second round of job cuts in just six months, as the bank seeks to reduce expenses amid a challenging economic environment and slower deal-making.
According to a source, the bank's investment banking unit's fees fell last quarter, leading to a nearly 2% decline in total revenue to $14.5 billion. The prolonged downturn in deals has prompted the bank to review its headcount, which is expected to result in job cuts across the organization.
M&A volumes in the first quarter of 2023 have nearly halved from the previous year, as investors have grown more cautious in volatile markets, and interest rates have rapidly risen. Additionally, initial public offerings have virtually come to a standstill, with startups putting off market debuts until investor sentiment improves.
Morgan Stanley's CEO, James Gorman, had announced in December 2022 that the bank would make "modest" job cuts worldwide, but did not specify an exact number. The latest round of job cuts is expected to affect nearly 4% of the bank's workforce, which currently stands at more than 82,000 employees.
Given the broader market uncertainty and elevated inflation, Morgan Stanley's finance chief, Sharon Yeshaya, had emphasized last month that "expense management" was a priority. With these job cuts, the bank hopes to manage expenses while navigating through a challenging economic environment.
The news of the layoffs comes as a blow to the affected employees, and the wider financial industry. However, it is not unusual for banks to periodically review their headcount in response to changing market conditions. It remains to be seen how the job cuts will impact the bank's operations and future growth prospects.
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