The cuts will not impact year end performance-based bonuses, even for potential job-losers or financial advisors within Morgan Stanley Smith Barney, a spokesman said.
"As we conduct our year-end performance management process and evaluate the right size of the franchise for 2012, we anticipate the elimination of approximately 1,600 positions across the firm globally impacting all job levels," Morgan Stanley spokesperson Mark Lake said in an emailed statement.Earlier this year the bank said it would shed about 300 underperforming financial advisers from its brokerage unit, Morgan Stanley Smith Barney, as it attempts to tighten its control on expenses. The investment bank is targeting an annual expense savings rate of $1.4 billion in the next three years. Morgan Stanley has a different compensation structure from its peers due to its significant global wealth management business. Its compensation- to- revenue ratio rose to 51% in the third quarter from 45% in the second quarter. CFO Ruth Porat said during the third quarter earnings conference call that expenses played "catch-up" in the third quarter, with the year to date ratio coming in at a lower 46%. Still she added that the investment bank would seek a balance between "protecting our important franchises and paying those employees who are delivering differential value" and the "need to deliver acceptable returns to shareholders."
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