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Morgan Stanley will reportedly cut several hundred bankers in its wealth management division in a cost-saving measure implemented by the Wall Street firm’s new CEO, Ted Pick.
According to The Wall Street Journal, the company plans to fire CEOs and other non-customer-facing employees. who was the first to report the planned layoffs.
The planned cuts are expected to affect less than 1% of a division that has approximately 40,000 workers, according to The Journal.
In the latest quarter, revenue at 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 a major cash cow for the bank after it made major acquisitions, including Eaton Vance and E*Trade, under former CEO James Gorman.
The layoffs, the latest for a series of Wall Street firms since last year, are being implemented due to layoffs arising from the $13 billion acquisition of E*Trade in 2020, sources told the Journal.
Following the takeover of E*Trade, the wealth management unit now oversees about $5 trillion in assets, representing about half of the bank’s total revenue.
The unit has helped make Morgan Stanley less reliant on its traditional commercial and investment banking pillars, whose revenue can be volatile.
Last month, the bank’s new CEO, Ted Pick, reiterated Gorman’s goal of reaching $10 trillion in assets under management.
Morgan Stanley declined to comment.
The company’s share price was stable on Wednesday.
The cost-cutting decision will be Pick’s first major move since taking over from Gorman earlier this year.
Gorman led the bank after the 2008 financial crisis and held the top job for more than a decade. He remains the CEO of Morgan Stanley.
Before being named CEO, Pick, 54, earned a reputation as a loudmouth executive who likes to party, The Post previously reported.
He has spent three decades at the firm and has led the institutional securities division, home of the bank’s investment banking and trading unit.
The bank had almost 80,000 employees at the end of last year, its latest quarterly report showed.
The bank’s fourth-quarter earnings took a hit when net income fell to $1.5 billion in the three months 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 replenish a government deposit insurance fund that was emptied by the collapse of two regional lenders last year.
It also took $249 million in legal fees to resolve a government investigation.
Last week, Morgan Stanley agreed to pay that amount to end years-long investigations into its handling of large stock transactions for clients.
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