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Wednesday, 25 June 2008

Asia not immune from Morgan Stanley’s axe

Sarah Butcher

Morgan Stanley bankers who were hoping John Mack would take pity on them again this year are due to be disappointed. And Asia is no safe haven from the global carnage.

Last December Mack raided the coffers to stump up a 5% increase in average compensation for 2007 over 2006, but he now appears to have decided his people can do without. Whereas the average Morgan Stanley banker had accrued $108.3k in salary and bonus by this time last year, that figure is now down to $63.8k – a drop of 40%.

Instead of hanging on for a paltry bonus, the better bet at Morgan Stanley might be to get yourself laid off. The bank’s Q2 figures show that it made a total of $245m in severance payments to 660 staff last quarter, an average of $371.2k.

A nice new redundancy cheque may be easy to get your hands on later this year, even in Asia. The i-bank’s Q2 revenues fell 25% in the region – against a 14% drop in EMEA. This income slump has already taken its toll on headcount, with Tokyo in particular feeling the full force of Morgan Stanley’s axe. About 90 securitised products jobs have already gone. Real estate financiers have also been dumped.

One recruiter, who did not want to be named, describes the mood at MS: “Morgan Stanley's canning of their entire securitised product group in Japan has caused a lot of dismay. They've cut very deeply in Asia this quarter. It's not a happy place at the moment.”

Yukihiro Koshiishi, at Russell Reynolds in Tokyo, says the layoffs are part of a broader bloodletting by the bulge bracket. While Asian revenues at Morgan Stanley and its rivals are starting to suffer, Koshiishi believes that post-credit crunch troubles at the firms’ US and European headquarters are actually driving most of the staff reductions.

Morgan Stanley would not provide redundancy figures for Singapore and Hong Kong, but recruiters there believe that in most job functions it’s either cutting or resorting to replacement-only hiring.

Staff remain anxious, says one headhunter, who asked not to be named: "There have been rumours about upcoming redundancies in Hong Kong. I was talking to someone at Morgan Stanley this week who said that a lot of people there expect a reshuffle, but don't know exactly what's going to happen."

Worldwide the bank actually managed to end this quarter with 545 more staff than it had in May last year, but in the current belt-tightening climate its headcount now looks set to decline.

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