Morgan Stanley, Lehman Brothers Holdings Inc and Credit Suisse Group are eliminating about 1,640 jobs as the worst US housing market in 26 years slows economic growth and their profit outlook.
Morgan Stanley's cuts will affect asset management, retail brokerage and support areas such as technology and administration, a person familiar with the firm's plans said. The positions at Lehman are concentrated in structured finance, commercial real estate, securitization, trading of mortgages and collateralized debt obligations, a second person said.
Banks and brokers have eliminated more than 25,000 jobs in the past six months as they racked up US$136 billion in writedowns and credit losses tied to mortgage securities. Morgan Stanley, which reported its first-ever quarterly loss last month, cut 900 jobs last year from areas that offered mortgages, packaged and traded debt securities and provided high-yield loans.
"The firm is engaged in an ongoing process of assessing its personnel needs in light of overall market conditions, business priorities and individual performance," said Jim Wiggins, a spokesman for the New York-based firm. "This process will involve headcount reductions in some areas and additions in other areas."
Credit Suisse, the second-biggest Swiss bank, said yesterday it was cutting 500 investment banking jobs, mostly in equities and fixed-income units. The cuts are "due to market conditions and projected staffing levels required to meet client needs," its New York spokesman, Bruce Corwin, said in an emailed statement yesterday.
Lehman, the largest underwriter of mortgage-backed bonds, has already cut 3,750 jobs at subsidiaries that make home loans and shut down one of them last year. Kerrie Cohen, a spokeswoman for New York-based Lehman, declined to comment on the new job cuts. Vice chairman Thomas Russo said earlier yesterday Wall Street firms would face more headwinds this year.
"There are still some credit markets that are frozen," Russo said in a Bloomberg television interview. "The fixed- income area will probably remain difficult. How difficult will depend on the economy as a whole."
Morgan Stanley, which has lost 27 percent on the New York Stock Exchange in the past 12 months, fell US$0.47, or 0.9 percent, to US$51.23 in composite trading at 4:26pm. Lehman rose US$0.60, or 1 percent, to US$59.56.
The new cuts at Morgan Stanley, which will take place over coming weeks, equate to about 2 percent of the 48,256 people that the firm employed at the end of November. They aren't expected to target the firm's institutional securities division, which includes trading and investment banking, the person said.
Lehman's cuts represent about 4 percent of the headcount in the fixed-income division. The company used hedges to avoid the bigger losses reported by some of its competitors. Lehman's writedowns of mortgage-related assets were limited at US$1.5 billion, compared with US$9.4 billion at Morgan Stanley and US$24.5 billion at Merrill Lynch & Co.
The Credit Suisse reductions will trim 2.5 percent of jobs from its investment banking division, which had 20,300 employees at the end of September, according to the company's Web site.
Wall Street firms are preparing for a slowdown in economic growth, which tends to reduce demand for investment-banking services. Citigroup Inc, the biggest US bank by assets, said last week it planned to cut 4,200 jobs.