Morgan Stanley (MS) will slash 1,200 jobs and take a severance charge of about $150 million in the fourth quarter as the company pares back its fixed-income trading business to improve profitability.
The charge will cover the cost of cutting 1,200 workers worldwide, including about 470 traders and salespeople in its fixed-income and commodities business, according to a person briefed on the matter. That amounts to 25 percent of Morgan Stanley’s fixed-income trading staff, with other reductions coming in infrastructure and support roles, said the person, who asked not to be identified because the figures aren’t public.
While the financial industry may be reaching the end of a years-long slide in the fixed-income trading business, it’s unclear how much revenue it will reliably produce after stabilizing, Colm Kelleher, head of the investment-banking and trading division, said at a Nov. 17 investor conference. Kelleher said the fourth-quarter trading environment wasn’t much better than the third quarter, when Morgan Stanley posted a 42 percent plunge in fixed-income revenue.