By Christine Harper
Oct. 17 (Bloomberg) -- Morgan Stanley, the world's second- biggest securities firm, is eliminating about 300 jobs after third-quarter revenue from fixed-income fell 3 percent, said a person familiar with the decision.
The cuts affect the New York-based firm's institutional securities division, which includes fixed-income, equities and investment banking, said the person, who declined to be identified because the reductions aren't public. About 200 of the jobs are in the U.S. and most of the others are in Europe. Some of the employees will be moved to Asia, the person said.
Wall Street firms are slashing units that provide financing for leveraged buyouts and package mortgages and other loans into bonds after the collapse of the subprime mortgage market eroded investor demand for high-risk, high-yield debt during the past three months. Morgan Stanley competitors including Credit Suisse Group, UBS AG and JPMorgan Chase & Co. have also announced cuts.
``With the volume of deals lessening, the amount of people in the team is going to lessen,'' said Jeanne Branthover, head of the financial services practice at Boyden Global Executive Search Ltd. in New York. ``There's still business to be done, just not as much business and they're going to be more selective.''
Morgan Stanley rose 51 cents, or 0.78 percent, to $65.81 in New York Stock Exchange composite trading today. The stock has declined 2.6 percent this year.
Moving to Asia
The biggest part of the job cuts, which are being announced within the firm today, will be in businesses such as mortgage- backed securities, collateralized debt obligations and leveraged finance, the person said. Also included are some typical year-end reductions in the investment banking division and some jobs that are being moved from the U.S. to Asia, the person said.
``We are selectively re-sizing some of our business to reflect current market conditions as well as reallocating resources to those regions outside the U.S. where we see the best potential for growth,'' said Jeanmarie McFadden, a Morgan Stanley spokeswoman. She wasn't more specific.
The 300 jobs represent less than 1 percent of the firm's 47,713 worldwide employees as of the end of August. The company doesn't provide details on the number of people who work in the institutional securities division, one of the businesses by Co- President Zoe Cruz, who also oversees the firm's retail brokerage.
Cruz, 52, is the former chief of Morgan Stanley's fixed- income division. She has served as president or co-president of the overall firm since March 2005.
Profit Drop
This round of cuts is in addition to about 600 jobs the firm eliminated earlier this month in units that make home loans.
One of the people affected by today's reduction is David Warren, who was global head of structured credit trading until recently, when Matt Zola took over his role, the person said. Warren didn't respond to a message left at his office at Morgan Stanley in New York.
Morgan Stanley last month reported third-quarter profit from continuing operations fell 7 percent to $1.47 billion, or $1.38 a share, missing analysts' estimates for the first time in at least six quarters.
The firm said credit-trading revenue, which includes mortgage-related securities, dropped by more than $1 billion from the second quarter. The firm also wrote down the value of loans and loan commitments by $877 million.
Options Group, a financial-services recruitment firm, estimated in August that about one in three Wall Street employees involved in creating and selling securities backed by mortgages or pools of loans will lose their jobs this year unless market conditions improve.
The reductions were earlier reported by Web site Silicon Alley Insider.
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