Following the latest layoff wave towards 4% of its employees, Morgan Stanley investment banking business unit slump 24% last month.
Heaptalk, Jakarta — Morgan Stanley is reported to slash its employees in the second quarter of 2023. As informed by the company’s spokesperson, this job-cutting consideration will impact about 3,000 workforces. This efficiency move becomes the second wave of layoff in the last six months, following the early layoff wave of about 1,600 people last December 2022.
Cited in Katadata (02/05), the Morgan Stanley representative stated, “The slowing business deals and the challenging economic environment have forced our company to reduce the number of employees,”
As of the end of last March, this US-based investment company employed about 82,500 workforces. The newest layoff round is estimated to affect nearly 4% of its staff and impacted several company positions, excluding financial advisers and personnel supporting them within the wealth management division.
Before the issue of layoffs arose, Morgan Stanley’s Chief Financial Officer, Sharon Yeshaya, unveiled plans for this second round of layoffs right after the company’s revenue plunged nearly 2%, becoming US$14.5 billion, or approximately Rp212 trillion.
Impacting the company’s revenue diminishment, an investment banking business unit of Morgan Stanley reported a 24% last month due to a decrease in mergers, initial public offerings, and financing activities. Sharon admitted that expense management was the company’s priority, given the more comprehensive market uncertainty and rising inflation.
Moreover, the impact of the slowdown in the global economy due to the Russia – Ukraine war and the tightening of the zero-covid policy has prompted central banks to take hawkish steps by hoisting the benchmark interest rate to the highest level.
Although an increase in interest rates is considered the most effective way to balance prices and stabilize the inflation rate quickly. However, the aggressive stance of central banks such as the Fed and the European Central Bank (ECB) has triggered a decline in profits in several global investment banks.
The presence of this pressure has forced the startup founders to postpone the initial public offering offered by this banking company, which caused a decline in the investment business of Morgan Stanley amid the global economic uncertainty.
According to the analyst, investment banking company Wall Street has also suffered from a downturn in deals as investors have become more cautious about volatile markets and rapidly rising interest rates.
