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Morgan Stanley prepares to cut 3,000 jobs as M&A activity intensifies

Morgan Stanley plans to cut 3,000 jobs in the second quarter amid a continued slowdown in the mergers and acquisitions (M&A) space and growing recession concerns, according to a source cited by Bloomberg.

“Senior managers are discussing plans to cut about 3,000 jobs from the global workforce by the end of this quarter,” according to the source.

This proposed reduction would equate to a reduction of approximately 5%, excluding financial advisors and their support staff in the wealth management division. As of the fourth quarter of 2022, the New York-based investment bank had 82,427 employees.

In a separate report, a Reuters source said muted M&A activity and growing macroeconomic headwinds prompted Morgan Stanley to push ahead with job cuts to cut costs.

Last month, CEO James Gorman said he expected moderate M&A activity for this year and expected a pick-up in 2024.

Morgan Stanley’s profits fell in the first quarter from a year ago, mostly reduced by a sharp decline in hiring, with a 32% drop in merger advisory and a 22% drop in its underwriting business of capitals

Data from Dealogic shows that M&A volumes in the first quarter were halved from a year earlier. M&A volumes are unlikely to pick up anytime soon as the Federal Reserve is determined to raise interest rates to control the highest inflation in decades. In addition, the regional banking crisis and credit tightening will continue to create pessimism in capital markets.

In December, Morgan Stanley cut 1,600 jobs. Goldman Sachs eliminated 3,200 jobs in January. Last week, Lazard announced plans to cut its workforce by 10% due to a slowdown in mergers and acquisitions.

With the M&A space continuing to stagnate, more investment banks are expected to reduce their workforce as the threat of recession looms.

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