Morgan Stanley has cut about 2 percent of its workforce, a source familiar with the company’s plans said on Tuesday.
The job cuts, first reported by CNBC, will affect about 1,600 jobs out of Morgan Stanley’s more than 81,000 employees worldwide.
It follows job cuts at Goldman Sachs and Citigroup as banking giants return to pre-pandemic annual weeding out of underperformers.
Most investment banks cut the bottom 1 to 5 percent of employees just before bonus time to free up more bonus funds for those who remain.
James Gorman, Morgan Stanley’s chief executive officer, said last week that the company would be cutting modest jobs around the world.
Morgan Stanley Chief Executive Officer James Gorman was spotted last week. Morgan Stanley has cut about 2 percent of its workforce
The job cuts will affect around 1,600 of Morgan Stanley’s more than 81,000 employees worldwide. Above is the investment bank’s headquarters in New York
While financial advisers in Morgan Stanley’s wealth management division will not be fired, there will be job cuts in the unit, the source said.
Wealth management accounted for 47 percent of the bank’s revenue in the third quarter.
It comes as the biggest US banks brace for a deteriorating economy next year, with inflation threatening consumer demand, several top executives said on Tuesday.
JPMorgan Chase CEO Jamie Dimon told CNBC that consumers and businesses are in good shape right now, which may not last much longer as the economy slows and erodes consumer spending power, he said.
“These things could very well derail the economy and cause this mild to severe recession that people are worried about,” he said.
Consumers have $1.5 trillion in excess savings from pandemic stimulus plans, but these could expire sometime mid-next year, he told CNBC.
JPMorgan Chase CEO Jamie Dimon told CNBC that consumers and businesses are in good shape right now that may not last much longer as the economy slows
Dimon also said the Federal Reserve could pause for three to six months after raising interest rates to 5 percent, but that “may not be enough” to curb high inflation.
The Federal Reserve last month hiked interest rates by 75 basis points to 3.75 to 4 percent for the fourth consecutive month, but it also signaled that it hopes to move to smaller increases in borrowing costs soon at its next meeting.
Meanwhile, Bank of America CEO Brian Moynihan told investors at a Goldman Sachs financial conference that Bank of America research shows “negative growth” for the first half of 2023, but the decline will be “mild.”
“Economic growth is slowing down,” said David Solomon, CEO of Goldman Sachs. “When I speak to our clients, they sound extremely cautious.”
In banking, the job market is “surprisingly tight” and competition for talent “as fierce as ever,” he said.
A growing number of companies have responded to the slowing economy by shedding jobs to cut costs.
Federal Reserve Board Chairman Jerome Powell is seen in a file photo. The Fed will hold its next rate hike meeting on December 13-14.
Job cuts announced by US employers rose 13 percent in October to 33,843, the highest since February 2021, according to a report.
Last week, AMC Networks announced it was shedding about 20 percent of its US workforce as it announced that Chief Executive Officer Christina Spade had resigned after less than three months in office.
Facebook parent Meta said it will cut 13 percent of its workforce, or more than 11,000 employees, in one of the biggest layoffs in the tech sector this year as it grapples with a weak advertising market and rising costs.
Amazon laid off some employees in its device group, a person familiar with the company said it is still cutting about 10,000 jobs, including in its retail division and human resources.