Morgan Stanley, the giant American investment bank, has resized its numbers of employees and cut around 1,500 jobs globally. It means the bank has reduced roughly 2% of its existing workforce.
Reasons for Resizing its Workforce
The bank’s decision of resizing employees was a part of its strategy to address the slowdown of revenues in some units, controlling expenses, and other economic uncertainties.
According to Bloomberg, “The bank will take a charge of roughly $150 million to $200 million in the fourth quarter as part of the cuts.” As per the CNBC report, the bank’s decision will largely affect sales trading and research. The bank’s decision of reducing jobs is targeted mainly at its technology and operations units.
The decision of resizing employees was initially led by European banks such as German Deutsche Bank, which reduced around 18,000 jobs and Citibank, cut about 10% of its existing workforce in July.
Other companies include Commerzbank, Santander, and HSBC followed by a reduced workforce. Referring to this development, CNBC stated, “Wall Street firms often cut jobs toward the end of the year to avoid paying out bonuses.”
Morgan Stanley started cutting several managing directors and executives in sales as a part to push efficiency in its performance and restrain from impacts of the slow economic growth in global financial markets.
The bank faced higher expenses while the revenue was declining rapidly during the third quarter. According to the bank’s CEO James Gorman, “We remain committed to controlling our expenses.”
As Gorman explained in October 2019, “While business executives ‘remain confident’ in the US economy, they are also worried about whether trade negotiations will stay within the ‘guardrails of reasonableness’. Nobody wants to see a global economic slowdown.”
The Prevailing US Economy Conditions
Many economists warned investors to take precautions, as the US economy was likely to be affected by the ongoing trade deal between Washington and Beijing and the possibility of a recession. However, the US economy is growing significantly; except for the manufacturing industry, the rest of the other economic sectors in the US have been growing rapidly.
The addition of 266,000 jobs in the US in November 2019 brought in a surprise twist of the earlier expectation of several economy analysts. As a result, the unemployment rate in the country dropped to 3.5%, which was the lowest figure in 50 years.
One of the significant reasons for cutting jobs across banks globally was the introduction of new technologies such as artificial intelligence (AI) and automation. According to IHS Market, an analyst firm, “By 2030, about 1.3 million bank workers in the United States and 500,000 in the United Kingdom could be affected by the introduction of AI.”
The analyst continued, “Bank workers who will be affected through layoffs and reassignments include bank tellers, customer service representatives, loan interviewers, compliance officers, and loan officers.”
I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.
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