Morgan Stanley to cut 1,600 jobs
Few Wall Street CEOs have been as blunt about excessive banker compensation than Morgan Stanley CEO James Gorman.
His rhetoric has been noteworthy, and he recently told Bloomberg that "if you put your compensation in a one-year context to define your overall level of happiness, you have a problem which is much bigger than the job" and "if you're really unhappy, just leave."
Gorman is on a crusade to bring down banker pay, and he has struck another telling blow. The bank has announced it will cut 1,600 jobs in its profitable institutional securities group, which houses the main trading and investment banking units. That's about 6 percent of the group's total. The focus of the cuts will be well-compensated senior-level executives as well as others. About half the cuts will be in the United States.
The bank cut 4,000 jobs last year as well. The additional cuts are necessary from Gorman's point of view if the bank is to remain serious about expenses. Morgan Stanley will report its fourth quarter results next week, and it may be trying to lay a certain groundwork. It would like to get it ROE higher, as do all banks. But with the prospects for explosive revenue growth small, expense reductions continue to play a leading role.
Other banks have likewise returned to job cutting mode. Barclays reportedly will lay off 2,000 in its investment banking unit. Citigroup of course recently detailed plans to lay off 11,000, which drew applause from Mr. Market. More are expected soon. This will likely be an issue as earnings season gets underway on Friday.