Morgan Stanley to cut at least a quarter of fixed-income jobs in next two weeks

CEO Gorman calls it the worst quarter for fixedincome, currencies and commodities since he joined the firm in 2010

Morgan Stanley is planning a reduction of as much as a quarter of its fixed-income staff after years of revenue declines and insufficient returns, according to people with knowledge of the plans. The shares rose.

The cuts will be across all regions and are set to take place in the next two weeks, said two of the people, who asked not to be identified because the decision hasn’t been publicly announced. Hugh Fraser, a spokesman for the New York-based bank, declined to comment.

It’s “a pretty substantial step” for a firm that has preferred for years to change the business incrementally amid an industrywide slump, said Brennan Hawken, an analyst at UBS Group AG, who recommends buying Morgan Stanley’s stock. “The fixed-income environment was rough last quarter, and it remains tough,” he said.

Morgan Stanley last month reported a 42 per cent plunge in bond-trading revenue in what chief executive officer James Gorman called its worst quarter for fixed income, currencies and commodities since he took over in 2010.

While the financial industry may finally be reaching the end of a years-long slide in that business, it still isn’t clear how much revenue it’ll typically produce after stabilising, Colm Kelleher, head of the investment banking and trading division, said at a November 17 investor conference.

Compete globally

“The trick for us is to size our business appropriately to what we think the fee pool is,” he said. While trying to gauge that, the investment bank needs to keep the unit “credibly sized” to compete globally, and “make sure we have enough flex or leverage that when the markets recover, which we do think they’ll recover, you’ll be able