Morgan Stanley has told investors that its underperforming fixed-income unit will have to be a lot smaller than rivals' businesses in order to earn decent profits.
The Wall Street Journal reports that he shift, disclosed by a senior executive at a dinner earlier this month, marks a twist in Morgan Stanley's decade long struggle to become a force in the trading of bonds, currencies and commodities, a profit driver for many Wall Street firms.
During the dinner at Manhattan's fashionable SD26 restaurant, Colm Kelleher, Morgan Stanley's president of institutional securities, said the fixed-income unit would aim to pull in $1.5bn to $2.5b in quarterly revenue, significantly less than the firm's peak of $3.39b in the first quarter of 2007, according to people familiar with the meeting.
The unit generated $1.52bn in revenue in the first quarter, excluding accounting adjustments.
Hit the link below to access the complete Wall Street Journal article: