Morgan Stanley will reportedly slash several hundred bankers in its wealth management division in a cost-saving measure implemented by the Wall Street firm’s new CEO Ted Pick.
The company plans to cut managing directors as well as other non-customer-facing employees, according to The Wall Street Journal, which was the first to report the planned layoffs.
The anticipated cuts are expected to impact less than 1% of a division that has roughly 40,000 workers, according to The Journal.
In the last quarter, revenue from Morgan Stanley’s wealth management unit was flat compared to a year earlier, and the medium-term margin forecast for the business was below what some analysts had expected.
The wealth management unit became an important moneymaker for the bank after it clinched major acquisitions, including Eaton Vance and E*Trade, under former CEO James Gorman.
The layoffs — the latest in a string by Wall Street firms since last year — are being implemented due to redundancies that arose from the $13 billion acquisition of E*Trade in 2020, sources told the Journal.
Following the absorption of E*Trade, the wealth management unit now oversees around $5 trillion in assets — which accounts for around half of the bank’s total revenue.
The unit has helped make Morgan Stanley less dependent on its traditional mainstays of trading and investment banking, revenues from which can be volatile.
Last month, the bank’s new CEO Ted Pick reiterated the target, set by Gorman, of reaching $10 trillion in assets under management.
The Post reached out to Morgan Stanley for comment.
Morgan Stanley’s stock price was trading flat on Wednesday.
The cost-cutting decision will be the first major move by Pick since he took over for Gorman at the start of the year.
Gorman had steered the bank in the aftermath of the 2008 financial crisis and held the top job for more than a decade. He remains Morgan Stanley’s executive chairman.
Before being named CEO, the 54-year-old Pick earned a reputation as a potty-mouthed executive who likes to party, The Post previously reported.
He has spent three decades at the company and has headed the institutional securities division, home to the bank’s investment banking and trading unit.
The bank had nearly 80,000 employees as of the end of last year, its latest quarterly report showed.
The bank’s fourth-quarter profit took a hit as net income fell to $1.5 billion in the three months that ended Dec. 31.
A year earlier, Morgan Stanley reported $2.2 billion in net income.
The bank’s fourth-quarter results were eroded by $535 million in charges.
It set aside $286 million to refill a government deposit insurance fund that was drained by the collapse of two regional lenders last year.
It also took $249 million in legal charges to settle a government probe.
Last week, Morgan Stanley agreed to pay that amount to end years-long investigations into its handling of large stock trades for customers.
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