Morgan Stanley to lock staff into three-month notice period

Morgan Stanley is set to increase the notice period required of its vice-presidents and executive directors to 90 days in a bid to keep hold of key talent during a period of expansion for the bank.

Currently, VPs at Morgan Stanley only need to serve 30 days notice, while executive directors are required to stay for 60 days. From 1 March, this is going to increase to a three-month notice period from VP level upwards.

Morgan Stanley has made no secret of its desire to recruit, with James Gorman telling the FT yesterday that it could easily be 25% bigger in some areas of sales and trading. It's also not being particularly generous with this year's bonus payments, which could see some employees get itchy feet.

Nonetheless, this could be viewed as less of an attempt to lock in its employees, and more a move to bring its notice periods in line with its competitors.

Morgan Stanley declined to comment, but one senior banker says it's would be at a "serious competitive disadvantage" were it to maintain notice periods at current levels.

During the bull market of 2006-07, most US investment banks increased their notice periods from one-month to three-months within revenue generating areas. In the post-bonus recruitment rush, Morgan Stanley staff would have therefore been prime targets.

"90 days is pretty much bog-standard for VP levels and above in front office roles now," confirms one financial services headhunter.

However, the increased notice period is to be applied across the board and, outside of the front office, this could be a disadvantage to Morgan Stanley staff.

One headhunter focusing on financial technology tells us: "It makes them that little bit less attractive. At director level, firms know there's a three-month notice period, but you expect to turn VPs around quite quickly."