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Morning Coffee:  Whole new horror for employees at Morgan Stanley. The MBA with a £330k bonus

Morgan Stanley cost cutting

James Gorman just unleashed a new terror at Morgan Stanley

Firstly, Morgan Stanley made 25% of its fixed income employees redundant. Secondly, it slashed the pay of all who remained. Thirdly and lastly, the bank is warning that it will be shifting as many jobs as possible to low cost locations like Budapest and Mumbai.

In an ominous echo of Tidjane Thiam at Credit Suisse, James Gorman told investors yesterday that, “Too many employees based in high-cost centers are doing work that can sensibly be done in lower-cost centers.” In the accompanying presentation, Gorman said Morgan Stanley will be ‘optimizing its relocation strategy.’

Gorman’s explicit intention is to reduce “infrastructure costs” by relocating jobs to cheaper places. However, the Wall Street Journal suggests Gorman’s intentions might be broader. ‘Project Streamline’, as the new cost reduction is known, also involves automating processes and consolidating functions, says the WSJ. And anyone hoping it’s only support roles that will be off-shored could be disappointed:  Morgan Stanley’s Hungary office started as a quant outpost around 2007 . There’s plenty of potential for shifting banking jobs higher up the value chain.

Separately, Poets and Quants has been scanning the MBA employment reports of top US business schools. It concludes that NYU Stern sends the highest percentage of its students into investment banks (24% vs. 16% at the next closest rival, Chicago Booth). However, the real excitement is reserved for an MBA from Stanford Business School who landed a private equity job with a $467k guaranteed bonus in the first year. It helps to be near Silicon Valley….

Meanwhile:

Morgan Stanley has finished cutting in fixed income. (Bloomberg) 

Fixed income trading revenues at top banks have fallen 18% to 25% since 2012. (Bloomberg) 

Sumitomo Mitsubishi wants to double its US fixed income sales and trading team. (Bloomberg)

Goldman Sachs has identified loans and bond underwriting as key additional sources of profit. (WSJ) 

But debt underwriting has been doing very badly of late. (Financial News) 

If you work in M&A, you’re probably too optimistic about your bonus. (Reuters) 

Goldman Sachs just hired an attorney as chief of staff in its technology division. (Business Insider) 

“Across our industry, the adviser population is shrinking — except at Merrill Lynch, where we’re growing our adviser numbers, both from recruiting and a record number of graduates from our training program.” (InvestmentNews) 

Lazard just hired this new managing director for its restructuring business. (NYTimes) 

Libor broker tries the stupidity defence. (Bloomberg)

This is why you don’t really want to invest in film finance tax relief schemes. (WSJ)

Barclays equities salesman has ear bitten off in pub fight. (Evening Standard)

Weird job interview at Goldman Sachs: “You have 10 mice and 1000 bottles of wine. You also have 24 hours before a party, and one of the bottles has been tainted with a slow acting poison…” (CityAM) 

Secrets of the MIT poker course. (MentalFloss) 

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