Morgan Stanley on Wednesday outlined plans to cut 10 percent of staff in its biggest business, which covers everything from investment banking to stock trading.
The nation's No. 2 securities firm, which converted into a bank holding company in September, plans to scale back its most capital-intensive businesses before the end of the year. The layoffs inside the institutional securities group follow a 10 percent cut made earlier this year to the same group.
Morgan Stanley also plans to restructure its money management business by cutting 9 percent of the staff there. It was not immediately clear how many positions will ultimately be eliminated from the company's total ranks of about 44,000.
"The firm is resizing its cost base and head count to match current opportunities in the market place, while reallocating resources to those businesses that provide an attractive risk-adjusted return on capital," spokesman Mark Lake said.
The plan was unveiled by Morgan Stanley Chief Financial Officer Colm Kelleher and Co-President James Gorman at a conference in New York hosted by Merrill Lynch & Co., and comes a week after competitor Goldman Sachs Group Inc. began laying off workers.
Slides from that presentation indicate the firm has reduced leverage, with total assets falling below $800 billion from $987 billion during the fiscal third quarter. In addition, Morgan Stanley said 33 percent of its assets are funded with equity, underwriting and deposits, up from 21 percent in 2007.
Morgan Stanley also plans to downsize its prime brokerage, proprietary trading, principal investments and commercial real estate origination businesses. However, there are plans to build up areas such as foreign exchange, commodities and investment banking, according to the slides.
There has been speculation that Morgan Stanley, like rival Goldman Sachs, might consider acquisitions to help beef up its asset management and other deposit-taking businesses. Both became bank holding companies to stabilize their balance sheets after Lehman Brothers Holdings Inc. filed for bankruptcy in September.
Also on Wednesday, Morgan Stanley hired two top executives to help launch its new retail banking business from Wachovia Corp., which is being acquired by Wells Fargo & Co. Cece Sutton, Wachovia's head of retail and small business banking, was named president of the new group. And, Jonathan Witter, who was head of distribution at Wachovia, will become chief operating officer of Morgan Stanley's retail bank.
Morgan Stanley also raised $9 billion in a deal with Japan's Mitsubishi UFJ Financial Group Inc. and received $10 billion as part of the government bailout package.
Massive job cuts are likely to figure in the restructuring of Wall Street, with financial companies rolling back their payrolls to levels seen a few years ago. Goldman Sachs' announcement earlier this month that it will cut 10 percent of its work force follows steep layoffs at now vanquished Bear Stearns and Lehman Brothers.
New York Governor David A. Paterson said in late October that Wall Street job losses would top 45,000, and there have been some reports that it could hit as much as 70,000.