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Morgan Stanley to fire staff

Morgan Stanley Dean Witter & Co, the biggest securities firm by market value, plans to fire at least 150 investment bankers, the first Wall Street cutbacks since the Sept. 11 terrorist attacks.

The dismissals, likely in the next several weeks, total 10 percent of the 1,500 professionals in the firm's investment bank and include senior executives, say people at the firm. A managing director said he gave top management a list of those he plans to fire. Morgan Stanley spokesman Ray O'Rourke declined comment.

Morgan Stanley's investment-banking revenue declined 33 percent in the first nine months and its market share has slipped.

Last year's top merger adviser, Morgan Stanley now ranks No. 4.

The Sept. 11 terrorist attacks deepened the slump.

"Investment banks don't keep people around when pitch after pitch doesn't bring in business," said James Ellman, an analyst at Merrill Lynch Investment Management, which owned more than 750,000 shares of Morgan Stanley as of June after selling almost 400,000 shares in the quarter.

Morgan Stanley's cuts would add to the biggest wave of financial-industry layoffs since 1994. They may be followed by those at rivals. Earlier this year, Morgan Stanley fired 1,500 people in investment banking, trading, sales, research and asset management. Others, including Merrill Lynch & Co and Credit Suisse First Boston, have fired about 12,000 people this year.

Morgan Stanley executives had been planning cuts before the attacks that destroyed the World Trade Center and shut US stock markets for four days. The firm's year-end review process, when managers write several pages on each employee, ends Monday.

In the securities unit, payroll costs jumped to US$0.55 for every dollar of net revenue in the first nine months of the year from US$0.50 in the same period a year ago, as declining fees outpaced cost cuts. Managing directors typically earn more than US$1 million a year. Vice presidents, three years out of business school, have been earning more than US$500,000.

"Even before the World Trade Center attack, people across Wall Street were getting pink slips every day," Ellman said.

Morgan Stanley was the twin towers' biggest tenant, housing its asset management and brokerage units there. About six of its 3,700 there remain unaccounted for.

The layoffs are a departure from the recent past for Morgan Stanley. The firm avoided mass firings during slumps in 1994 and 1998. Morgan Stanley, whose president John Mack quit earlier this year and left Chief Executive Philip Purcell as its undisputed leader, also said it's paying more of its bonuses in stock instead of cash this year.

The number of employees at Morgan Stanley had risen 31 percent to 62,392 in the past four years, with the securities unit, which generated 60 percent of profit in 2000 and the first nine months of 2001, growing most quickly. Profits have tumbled after reaching a record last year. The value of mergers has plunged to US$1.23 trillion, down from US$2.94 trillion in 2000.
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