Financial services company Morgan Stanley is planning to cut its workforce by around 1,500 jobs due to concerns of economic uncertainty globally.
If Morgan Stanley will push through with the layoff of 1,500 employees, it will effectively reduce its total workforce by over 2%. The bank had a total of 60,532 employees at the end of September.
According to sources, the job cuts will mostly focus on technology and operations roles. Morgan Stanley plans to take a charge of approximately $150 million to $200 million due to the layoffs.
Financial services firms have been facing pressure recently to reduce spending to adjust to a challenging environment of low interest rates, slow economic growth and waning volatility in financial markets. The disruption by artificial intelligence and other new technologies also affected traditional bank jobs.
During the third quarter, Morgan Stanley's revenue slowed down but its compensation expenses continued to go higher. Chief executive officer (CEO) James Gorman said: "We remain committed to controlling our expenses."
Economic uncertainty
Other financial institutions have also reduced their workforce in order to reduce costs, including Deutsche Bank, which launched an overhaul in July to cut down its workforce by 18,000 jobs.
During a conference call in October, Gorman argued that while executives "remain confident" in the US economy, they are also wary about the trade negotiations between the US and China and whether they will be within the "guardrails of reasonableness." "Nobody wants to see a global economic slowdown," he added.
Technology disruption in the industry
The development of new technologies like artificial intelligence (AI) and automation has caused a significant disruption in the financial services industry. According to IHS Markit, approximately 1.3 million bank workers in the US and 500,000 in the UK could be affected by the introduction of AI by 2030.
Among these employees are bank tellers, customer service representatives, loan interviewers, compliance officers and loan officers
