eFC Briefing: Merrill, T. Rowe, Goldman, Morgan Stanley, Citi

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Securities jobs ended 2007 at a record high, despite layoffs. Goldman geared up to fire as many as 1,500 underperformers. Another member of Merrill's old guard exited. And T. Rowe Price hired a U.S. equity specialist away from a sovereign fund.

Headcount in the U.S. securities industry continued to creep upward in the second half of 2007, despite all the layoff announcements, Labor Department figures show. During 2007, industry employment climbed steadily and set record highs each month from June through December. The preliminary year-end total of 850,900 employees was 6,500 above June's figure, and 7,700 above the previous cyclical peak set in March, 2001. That should give pause to any optimists who believe the worst of the Street's job-cutting is past. In the down cycle of 2001-03, the industry shed 91,400 jobs, or 11 percent of its work force.


Weeding out its worst performers, Goldman Sachs may fire as many as 1,500 people in coming weeks. This isn't a mass layoff, but a yearly review of performance of "the bottom 5 percent" - most of whom are then shown the door. The wording in various media reports suggests most of these positions will ultimately be filled again. Besides paring modest performers, the purge might open the door for Goldman to cherry pick talent from rivals, most of whom are enduring tough times. However, after the bank's headcount shot up about 35 percent (8,000 jobs) in two years, and its CFO voiced caution about the near-term outlook last month, Goldman could let some slots stay open for awhile.


Ahmass Fakahany stepped down as Merrill Lynch co-president and chief operating officer, the latest high-level casualty of the firm's mortgage and structured credit write-downs. Greg Fleming, the other co-president, is expected to stay aboard, according to an unnamed source cited by Bloomberg News. Until May 2007, Fakahany was chief administrative officer, overseeing risk management, finance, and various support functions. Bloomberg says he also supported former Chief Executive Stan O'Neal's 2006 push to buy home lender First Franklin Financial Corp. Meanwhile, Reuters reports another departure: Lang Gibson, head of U.S. collateralized debt obligations research.


Man bites dog: Fund manager T. Rowe Price reportedly hired away the Kuwait Investment Authority's London-based head of U.S. equities, Helen Ford. She'll be a U.S. equity portfolio specialist in London, covering multiple strategies for clients in Europe, the Middle East and Africa, under Tim Noel, manager of the 16-strong global portfolio specialists team. The Kuwait Investment Authority is one of several sovereign wealth funds that burst into the spotlight last year by purchasing significant minority stakes in bulge-bracket U.S. and European banks. Some have also hired staff from Western institutions - a channel that runs both ways, evidently.


Morgan Stanley is set to eliminate more than 1,000 jobs in a cost-cutting move, Reuters reports. The cutbacks mainly affect wealth management and investment management - areas where other banks are expanding - plus back-office operations and technology. Institutional securities, which includes trading and investment banking, reportedly won't suffer a "substantial" reduction this time. Last year Morgan Stanley eliminated 300 investment banking and trading jobs and 600 mortgage jobs.


Citigroup's latest retrenchment brought 400 layoffs in London and a 5 percent cutback in equity research coverage, plus deeper reductions for fixed-income. Corporate finance and merger and acquisitions staff were affected as well, according to Financial News. The Financial Times pegged Citigroup layoffs at 400 in the UK alone. Goldman Sachs analysts reportedly forecast Citi will cut worldwide headcount as much as 7 percent, or about 26,000 positions.

Also last week, Citi told employees their 2007 bonus amounts. They were generally flat with 2006, but with shares making up a larger portion, Financial News said.


A week after unveiling plans to add hundreds of private client bankers, Credit Suisse said it will cut about 500 investment banking division jobs, mostly in the global securities department.


Banking boutique Morgan Joseph is the latest to meld its debt and equity sales teams into one unit. Matthew Stedman, managing director, was named head of the combined sales force. Trading head Matt DiBiase will focus on growing the "special purpose acquisition company" trading business, catering to hedge funds who want to sell their stakes in acquired companies. The Spac business is a key niche for Morgan Joseph, which managed seven such deals in the past four years and says it's one of the five highest-volume underwriters in the sector.

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