More than 400 bankers are likely to be axed at the US investment bank Morgan Stanley, which is streamlining its bond-trading business amid a worldwide downturn in fee income.
Around 100 of the job cuts are expected to be made in London, where the US bank has a base at Canary Wharf.
Some of the job cuts have already been announced internally. The bank declined to comment on the restructuring programme.
Morgan Stanley is cutting fixed-income staff, some of whom were hired relatively recently, after years of declining revenue and insufficient returns.
Insiders say the rate of return on investment in fixed-income trading has dropped to as low as 5% after regulatory changes forced banks to hold more capital against trading activities. Global demand has also fallen dramatically in an era of stable and low interest rates.
Bank sources said global fee income has fallen from around $160bn (£106bn) at the beginning of the millennium to $100bn immediately after the financial crash to even less than that now.
Morgan Stanley reported a 42% plunge in profits in October, in what chief executive James Gorman called its worst quarter for fixed income, currencies and commodities since he took over in 2010.
The bank is believed to have been put under pressure from investors to cut costs in response to falling revenues.
Other parts of the bank’s business are performing far better, with corporate deal-making enjoying a bumper year and equity-based transactions enjoying brisk business.
Morgan Stanley is said to have decided to make substantial cuts now, while leaving the bulk of its fixed-income business in place for when trading recovers.
Rival Goldman Sachs has suggested it will not make big job cuts in this area, presumably hoping to win market share from those banks, likely to include Deutsche Bank and Credit Suisse, who are retrenching.
This article was written by David Hellier, for theguardian.com on Monday 7th December 2015 12.44 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010