Morgan Stanley’s fixed-income and commodities business is capable of generating $4bn in annual revenue after the firm cut the operation in recent years amid an industrywide slump, Chief Executive Officer James Gorman said.
Bloomberg News reports that revenue from the unit in the second half of last year was “unacceptable” and well below the roughly $1bn needed every quarter to meet the potential of the business, Gorman said Tuesday at an investor conference Morgan Stanley sponsored in New York. The firm has finished eliminating jobs in fixed income and is now “rebuilding morale,” said Gorman, 57.
Unlike many of his peers atop the nation’s other big banks, Gorman moved aggressively to reduce Morgan Stanley’s fixed-income operations as the revenue pool for the industry tumbled. The firm in December said it would cut 25% of its fixed-income staff, including 470 traders and salespeople. The bank said Tuesday it expects to save $100m by moving 1,250 support staff to lower-cost locations.
The bond and commodities trading business brought in $873m in the first quarter, excluding accounting adjustments. That was up from $550m in the fourth quarter and $583m in the third.