Morgan Stanley to eliminate about 1,500 jobs

NEW YORK: Morgan Stanley, the second-biggest US investment bank, has started cutting about 1,500 positions in the US to trim expenses amid further market turmoil, a person familiar with the plan said on Tuesday.

The job cuts are the latest to sweep Wall Street as investment banks have been reeling from the global credit crisis that began last summer. Massive losses in mortgage-backed securities and other risky investments has caused global banks to write down more than $200 billion (euro128.8 billion).

Morgan Stanley plans to cut 1,500 positions from its payrolls, which represents about 5 percent of total employees, according to a person familiar with the plan who spoke on condition of anonymity because he was not authorized to speak publicly. The reduction will come mainly from back-office jobs, asset management and its institutional business, though retail positions such as broker will be left untouched.

``We are constantly evaluating business conditions to ensure we are right-sized for the environment,'' said bank spokesman Mark Lake. He said the company, which has about 47,000 employees worldwide, continues to hire for jobs in key areas such as emerging markets.

Job cuts were not unexpected for Morgan Stanley after its turnaround orchestrated by Chief Executive John Mack was stopped short last year. During the fourth quarter, the securities firm announced a $3.6 billion (euro2.32 billion) loss and secured $5 billion (euro3.22 billion) in investment from China's state-run sovereign fund.

Mack has continued to tell Wall Street analysts the firm will cut expenses to help weather the financial market turmoil. However, he's also expressed optimism about growth outside of the US as emerging markets remain somewhat upbeat.

Morgan Stanley made some headway during the first quarter, when it posted better-than-expected earnings. The company was able to offset more losses linked to subprime mortgages with aggressive stock and bond trading.

Mack said in March that many of the company's businesses are ``facing challenging market conditions,'' but that he remains ``satisfied with how Morgan Stanley navigated the ongoing market turbulence.''