Morgan Stanley Cuts Over 40 Employees in Mainland China and Hong Kong Amid Profit Decline

U.S. investment bank (IB) Morgan Stanley is set to cut more than 40 employees in mainland China and Hong Kong, Bloomberg News reported on the 16th (local time), citing sources.

Bloomberg stated that Morgan Stanley plans to reduce about 50 employees in the Asia-Pacific region starting this week, with up to 80% of the cuts occurring in China. The scale of this reduction corresponds to approximately 13% of the total Asia-Pacific staff (around 400 employees), excluding Japan. However, sources explained that the final timing and number of layoffs may change.

[Image source=Reuters Yonhap News]

Bloomberg added, "This layoff represents the largest restructuring Morgan Stanley has undertaken in China, its largest regional market," noting that despite Morgan Stanley's improved performance, net profit in the Asia region fell 12% year-on-year to $1.74 billion (approximately 2.4121 trillion KRW).

Earlier, a source explained that Morgan Stanley had postponed layoffs anticipating that relatively low bonuses compared to the industry would lead to voluntary resignations. However, as profits in China worsened, the company decided to proceed with larger-scale layoffs.

According to data compiled by Bloomberg, in the first quarter, the trading volume of Chinese company stocks in the U.S. and Hong Kong was $1.7 billion, about 30% of the same period last year, marking the lowest level in 20 years. Compared to the peak in 2021, the trading volume was only 4.3%.

Senior executives at investment banks in Asia saw their salaries fall to the lowest level in 20 years last year, and Bloomberg reported earlier this year that at least 20% of executives at banks including Morgan Stanley and UBS did not receive bonuses.

However, Morgan Stanley is not downsizing its China operations. The company established a futures firm in China last year and received approval for fund management, and last month it obtained trading and research licensing approvals.