Morgan Stanley's layoffs result in $308 Million expense

Morgan Stanley's attempt to curtail expenses through job eliminations has resulted in a hefty cost of US$308 million, with its investment bank bearing the majority of the impact.

In the second quarter, the bank disclosed severance costs related to its decision to cut approximately 3,000 jobs earlier in the year, reported Business Today. This move was prompted by a sustained decline in deal-making. The recent job cuts followed a previous round in December, during which Morgan Stanley reduced about 2 per cent of its workforce.

Amid a slowdown in investment banking, Wall Street firms have turned to job cuts as a means to control expenses. Competitors like Goldman Sachs Group and Bank of America have also implemented varying degrees of position reductions this year in response to cost pressures.

During June, Morgan Stanley's CEO, James Gorman, stated that it was improbable for the bank to implement further job cuts beyond the initial plan of eliminating 3,000 positions by the end of the same month. 

According to Bloomberg's report, the banking and trading group was anticipated to bear the majority of these reductions, which also affected some of Morgan Stanley's Asia-Pacific investment banking employees.

In the second quarter, compensation expenses at the bank increased to US$6.26 billion, up from US$5.55 billion in the corresponding period last year. As of the end of June, Morgan Stanley's employee count stood at 82,006, a decrease from the 82,266 reported at the end of March, according to Bloomberg.