Today is the day that Morgan Stanley announces its fourth quarter and full year results for 2016. Analysts at KBW thought the U.S. bank’s fixed income trading business had done inordinately well: they were predicting a 75% increase in fixed income trading revenues in the fourth quarter of last year compared to 2015, even though J.P. Morgan and Bank of America’s fixed income trading revenues were ‘only’ up 21% and 11% respectively.
In fact, Morgan Stanley’s 2016 tripled in the fourth quarter. Even so, headhunters say the bank has just made another round of fixed income sales and trading layoffs – principally in the U.S., with around 10 people leaving.
Morgan Stanley declined to comment on the headhunters’ claims. If true, they follow layoffs in Morgan Stanley’s investment banking business and in its London fixed income business. They also come after Morgan Stanley CEO James Gorman celebrated the bank’s ability to increase fixed income revenues despite having 25% fewer fixed income-focused staff than previously.
If fixed income jobs are disappearing at Morgan Stanley, the outlook is reportedly better for fixed income trading bonuses. The IBD bonus pool at Morgan Stanley is reportedly down by around 15%, but headhunters say the bonus pool for Morgan Stanley’s rates business is up by double digits in percentage terms. Then again, this may not be as exciting as its sounds: “Morgan Stanley have paid badly for years and if they’re hiking rates bonuses, they’ll be doing so from a very low base,” one headhunter comments.