New Delhi

Investment banking giant Morgan Stanley is set to reduce its workforce by cutting hundreds of jobs in its wealth management unit, sources tell Reuters.

Advertisment

The decision follows a trend among Wall Street firms over the past year, reflecting ongoing efforts to streamline operations and manage costs in the face of economic uncertainties.

The job cuts in the wealth management unit, impacting less than 1 per cent of its employees, come at a time when optimism about a soft landing for the economy is growing.

However, companies remain cautious and are actively seeking to trim expenses, particularly in light of uncertainties surrounding the trajectory of interest rate cuts by the US Federal Reserve.

Advertisment

Morgan Stanley's wealth management unit, a key revenue generator for the bank, faced challenges in the last quarter with flat revenue compared to the previous year.

The medium-term margin forecast for the business fell below analysts' expectations.

Despite becoming a significant money-maker for the bank after major acquisitions like Eaton Vance and E*Trade, the wealth management unit's performance has come under scrutiny.

Advertisment

An anonymous source highlighted that the unit played a crucial role in making Morgan Stanley less reliant on traditional revenue streams such as trading and investment banking, which can be volatile.

The bank's new CEO, Ted Pick, who assumed leadership at the beginning of the year, is expected to implement one of the first significant moves with this workforce reduction.

As of the end of last year, the bank had nearly 80,000 employees.

The recent job cut plans align with the bank's strategic goal of reaching $10 trillion in assets under management, a target set by former CEO James Gorman.

The wealth management unit, fuelled by major acquisitions, has been a cornerstone in diversifying Morgan Stanley's revenue streams.

The Wall Street Journal was the first to report Morgan Stanley's intention to reduce jobs in its wealth management unit.

However, the bank has declined to provide any official comment on the matter.

(With inputs from Reuters)