Morgan Stanley's cuts hit its already optimized fixed income team
If you've been at Morgan Stanley a while, you'll remember November 2015. This was when the US bank let go of nearly 1,200 people in its fixed income business, including 500 fixed income salespeople traders, 25% of its then total, including people it had only recently hired. Yesterday, Morgan Stanley's fixed income division was struck again, albeit a lot less forcefully.
Internal sources and headhunters say people were let go across FX, rates and credit teams both in London and globally, and that around 11 people were let go in FX sales alone. Most cuts yesterday appeared to hit the sales team; trading may yet follow. One headhunter estimated that around 30 people were let go in fixed income in London and there were reports of structured credit exits in New York. Morgan Stanley didn't respond to a request to comment.
The cuts come after Morgan Stanley spent the past few years rebuilding its fixed income team after the 2015 blowout. In 2020, the Financial Times reported that nearly half of the 1,200 fixed income jobs cut five years previously had been added again. Morgan Stanley CEO James Gorman said at the time that the bank had taken advantage of opportunities as "a lot of our competitors retreated from the space."
Gorman has repeatedly praised Morgan Stanley's slimmed down fixed income division, and declared that it was already right sized. Speaking during the bank's first quarter call in April, he said the bank's share of fixed income sales and trading revenues had increased from 6% to 10% and credited Ted Pick, Sam Kellie-Smith and Jay Hallik with helping to achieve that.
Why cut jobs now? Morgan Stanley is cutting 3,000 people across the bank and fixed income is not immune. Even though Morgan Stanley was hiring macro traders as recently as February in London, fixed income revenues fell 12% year-on-year in the first quarter versus a strong Q1 last year. Rates trading revenues were stronger than FX revenues during the period.
Headhunters say Morgan Stanley's salespeople and traders should be well-positioned to find new roles. "The timing of the redundancies is a little harsh, as most banks have done their hiring by June and hiring freezes kick in, but the FX market continues to be active from a hiring standpoint," says London headhunter Gregory Armon-Jones. Hedge funds are still busy recruiting from banks, says Armon-Jones. "We are still actively seeing demand for FX traders and salespeople, so expect most of the people leaving Morgan Stanley to find a new home swiftly."
Kumaran Surenthirathas at Rosehill Search, says banks will also be eager to pick up unwanted Morgan Stanley talent. “Whilst there has been a quiet Q1 and beginning of Q2, many banks are now opening their hiring for the year. They’ve realized that they don’t have enough people or have lost people in the past few months and that they need to hire. We are already helping many of our clients to take advantage of the dislocation at Morgan Stanley to hire these talented and well trained individuals.”
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