Wall Street is being hit by another wave layoffs, with Morgan Stanley, Lehman Brothers and JPMorgan Chase all set to axe staff in the near future.
Oliver P. Quillia for cnbc.com
Morgan Stanley
Morgan Stanley is planning another round of layoffs in the coming days, finalizing a plan to slash another 5 percent from its securities-firm workforce, or 1,500 employees, CNBC has learned. And Lehman will announce another round of cuts in addition to those already begun as early as next week.
People inside Morgan say the cuts will be across all business units, except brokers who make money largely on a commission basis and usually leave on their own when markets drop or business slumps. Morgan Stanley has 46,000 employees, including 8,000 brokers.
"We are constantly evaluating business conditions to ensure we are right-sized and we continue to do that," a Morgan Stanley spokesperson said when asked for comment. A Lehman spokeswoman declined to comment.
The cutbacks reflect the souring business environment on Wall Street. Morgan Stanley has already announced a $9 billion writedown stemming from a wrong-way bet on the mortgage-bond market, and has announced losses due to the bad trades.
Morgan rebounded in the first quarter of 2008, reporting net income of $1.5 billion. But business conditions remain weak, and profit margins are being squeezed across the securities business. By comparison, Morgan’s first quarter profits of $2.5 billion for the first quarter of 2007 were nearly twice as large as its first quarter 2008 results.
People inside Morgan say CEO John Mack believes the 5 percent cut, which will begin any day now and continue through the end of June, may be the last round of job cuts at the company this year, which has already announced job reductions of 5 percent, or around 2,800 employees.
Mack’s plan, these people say, is to slash 10 percent of the firm’s workforce during 2008, though he is leaving his options open to cut more if business conditions don’t improve. “Hopefully this is it for 2008, but you never know,” a Morgan executive told CNBC.
Widespread Wall Street Layoffs
Elsewhere on Wall Street, JPMorgan Chase is cutting its own staff to make room for incoming Bear Stearns executives it's hired as part of its purchase of that firm. According to one senior executive at JPMorgan, the firm also wants to "right size" the business.
JPMorgan is expected to cut more than half of Bear Stearns' 14,000 former employees, though CNBC has learned that JPMorgan has already offered jobs to around 4,000 former Bear workers. Senior people inside JPMorgan say the firm has no hard figure for the size of the layoffs.
Meanwhile, CNBC has learned that Lehman Brothers next week also is expected to add to the 4,900 layoffs it has already announced.
Chief executives of major wall street firms tell CNBC that the unofficial head-count reduction on Wall Street overall is 10 percent per firm as a result of losses and declining business stemming from the disappearance, at least for now, of the once-lucrative structured finance business.