Dive Brief:
- Investment bank Morgan Stanley is cutting about 1,500 jobs, or 2% of its workforce, sources told Bloomberg and CNBC on Monday, in what is alternately described as a year-end push for efficiency or a reaction to global economic uncertainty.
- The technology and operations divisions are slated to be hit hardest, but executives in sales, trading and research also will be affected.
- In a separate blow, France’s market regulator fined Morgan Stanley $22.2 million Tuesday for allegedly manipulating the price of government bonds in 2015.
Dive Insight:
A multiyear slump in trading revenue, combined with the expectation that automation will take over more jobs, has spurred investment banks to shed staff in the latter half of this decade. Citi and Deutsche Bank announced cuts this summer.
Morgan Stanley cut a quarter of its fixed-income workforce in 2015, after it reported a sharp decline in that segment’s revenue. Since then, the bank has gained market share despite allocating less capital and fewer people to that part of its business. Morgan Stanley reported a 21% increase in fixed-income trading revenue in this year’s third quarter and generated $5 billion from the business last year, Bloomberg reported. Analysts expect the bank to end 2019 with 10% more fixed-income trading revenue than in 2015, while rival Goldman Sachs’s total has dropped about 20% in that time frame, according to Bloomberg.
Morgan Stanley plans to take a charge of $150 million to $200 million in its fourth-quarter results connected to the job cuts, a source told Bloomberg. The bank had 60,532 employees as of Sept. 30, according to CNBC.
In Tuesday’s decision from the Autorité des Marchés Financiers, London-based Morgan Stanley traders "aggressively" purchased futures contracts linked to French bonds to cause an "abnormal and artificial" increase in the price of French and Belgian bonds it held, according to Financial Times.
The June 16, 2015, trades came amid bond market volatility as Greece was thought to be leaving the eurozone.
Morgan Stanley said it was "disappointed" in the finding and intends to appeal the decision.
The bank’s trading operations made headlines last month, when Morgan Stanley fired or placed on leave at least four traders over an alleged mis-marking of securities that concealed losses of between $100 million and $140 million.
Morgan Stanley's stock is up about 25% this year, its best showing since 2016.
