Could Morgan Stanley and Deutsche Bank Be Preparing New Job Cut Announcements?
New job cut announcements could be coming "in the near term from both Morgan Stanley and Deutsche bank," according to a Zacks Investment Research report from its Deputy Manager of Equity Research, Kalyan Nandy.
A previous analysis by eFinancialCareers said layoff risk at Deutche Bank's corporate & investment bank was low, with revenues for the first six months of the year up 2% year on year these divisions. However, the cost-income ratio remains high at 71%, so staff cuts could theoretically take place. The firm increased average compensation by 6% this year, versus 2011.
Morgan Stanley, meantime, stated emphatically last month that the firm has no plans for a major reduction in its workforce other than 300 or so underperforming Financial Advisors. "There's no hiring freeze, but we expect to cut back significantly in hiring in the third and fourth quarters this year, and continue to only hire for critical roles," Morgan Stanley asserted in early July.
Still, Fox Business News Charlie Gasparino stood by his reporting that, according to his sources, Morgan Stanley was busy "running layoff scenarios into several thousand folks."
eFinancial Careers has judged layoff risk at Morgan Stanley to be "moderate," given that Morgan Stanley's investment bank did relatively well in the first half, with fixed income revenues falling by just 10% year-on-year and a drop of only 11% in its institutional securities division. In response to the Fox News report, Morgan Stanley did admit to planning major cutbacks in hiring in the third and forth quarters of this year.
Things are looking bleak for banks in general according to Nandy, who says that "Overall, until revenue generation revives, a hideous cost-to-income ratio will continue to force many more banks to reduce costs through job cuts as they need to maximize profits in order to boost capital ratios."
In other news, Bank of New York Mellon's money management division will likely lose part of its workforce as part of the 1,500 layoffs announced by the company as a way to reduce runaway expenses.
Pensions & Investments quoted a bank spokesman as saying the reduction would impact ever business group. BNY Mellon Asset Management oversees combined assets of $1.3 trillion as reported this week by eFinancialCareers.
The August 10th announcement BNY Mellon said it was making the staff cuts-which amount to approximately 3 percent of the company's global workforce-to reduce expenses, which have been growing faster than they can be sustained. It added that these initiatives are in addition to ongoing operational and technology efficiency efforts. The Zacks blog suggests regulatory constraints are also playing a role in BNY Mellon's decision to lay off staff.
>b>State Street is also laying off in technology
Finally, eFinancialCareers reported last month that BY Mellon's "closest competitor," State Street, would reduce 850 technology jobs through layoffs and outsourcing. The provider of financial services to institutional investors says it will transfer employment of 320 State Street technology employees who do not deal with customers to two providers of computer and consulting services, IBM, based in the United States, and Wipro Technologies, based in India.
Securities Technology Monitor says another 530 persons are expected to be let go over the next 18 to 20 months and are expected receive severance and outplacement services.
This is in keeping with State Street's previously announced intention to cut 5 percent of its work force, as it accelerates its investment in new technologies such as "private processing clouds" and "lean methodologies" of operating, says the securities technology site.