Morgan Stanley considers 7% job cut at Asian investment bank

Finance


(Bloomberg) – Morgan Stanley is considering cutting its Asia-Pacific investment banking workforce by 7%, but China is slamming a deal as deteriorating ties with the U.S. and slowing economic growth hold back deals. Officials said it was the worst hit.

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The bank is likely to begin contacting affected bank officials as soon as this week, with more than 40 jobs at risk, including those in the capital markets division, one of the people said. He spoke on the condition of anonymity because the matter is confidential. Other departments may be slightly affected, the people said, adding that no final decision had yet been made on the number of job cuts.

The job cuts are part of Morgan Stanley’s plan to cut about 3,000 jobs globally by the end of the quarter, Bloomberg reported earlier this month, including financial advisors and wealth management. It is said that it corresponds to about 5% of the staff within the department, excluding the personnel who support them. Morgan Stanley employs a larger Chinese team in Hong Kong than most rivals and has become vulnerable as trading activity slows.

The New York-based firm had already laid off about 50 jobs in its Asian investment banking business by the end of last year after a sharp drop in transactions, a significant number of which were China-focused positions. rice field. The cut was one of the biggest for a Wall Street company last year, the people said.

A Hong Kong spokeswoman for Morgan Stanley declined to comment.

Multiple layoffs in quick succession are rare in Asia. At Morgan Stanley, the region has contributed about 13% to the group’s net revenues over the past five years, reaching $6.7 billion by the end of 2022.

Global banks, which have long been bullish on the world’s second-largest economy, are now looking to scale back, even as they believe the long-term opportunity is too great to ignore. Enthusiasm about reopening China’s economy is waning as sentiment cools on rising tensions between the world’s two largest economies.

Investors are also betting less on Chinese equities, with the main sellers of Chinese stocks being long-only U.S.-based fund managers. U.S. President Joe Biden aims to sign an executive order within the next few weeks restricting U.S. companies from investing in key parts of China’s economy, people familiar with the matter said in April.

Asia’s first-quarter net revenues were $2 billion, down 2% from a year earlier, while Europe, the Middle East and Africa were down 25%, according to Morgan Stanley’s latest filings. In an earnings call with analysts last month, the bank said Asia posted its third-highest quarter on record, helped by Japan’s policy dynamics and China’s reopening.

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