Morgan Stanley plans more layoffs but is also preparing to launch a retail banking business.
(According to Bloomberg, Morgan Stanley hired Cece Sutton from Wachovia Corp., where she rose to executive vice president from branch manager during a three-decade career, to run the retail bank. Ms. Sutton, 50, was in charge of retail and small-business banking at Wachovia, Morgan Stanley said Wednesday. Morgan Stanley also hired Jonathan Witter, 39, from Wachovia, which is being acquired by Wells Fargo & Co., as the new group's chief operating officer.)
The New York investment bank will lay off 10% of its institutional securities professionals, Colm Kelleher, its chief financial officer, said Wednesday at Merrill Lynch & Co. Inc.'s banking and financial services conference in New York.
The firm has already cut about 10% of its work force overall this year. The planned layoffs are in addition to those, Mr. Kelleher said. The company also plans to reduce its head count by 9% within the asset management business globally, but will continue to develop its overall global wealth management business. Morgan Stanley said performance in asset management has been "mixed." James Gorman, co-president of the firm, said it plans on "instituting greater expense discipline."
The prime brokerage business has been affected by the difficult market conditions, and Morgan Stanley is in the process of "re-engineering" that business.
Morgan Stanley became a bank holding company in September, as did Goldman Sachs Group Inc. However, Mr. Gorman said his company does not expect "material changes in the day-to-day businesses."
Mr. Kelleher said Morgan Stanley "welcomes" increased regulation by the Federal Reserve Board and others despite the higher costs that would result.
One benefit of bank holding company status is that bank deposits could lower the cost of funding. Morgan Stanley has been bolstering its deposit base and plans to start a retail banking line.
Mr. Gorman said Morgan Stanley will leverage its 450 branches and its force of 8,500 financial advisers. New bank products and new channels of business will be launched, he said.
Morgan Stanley, which is taking a different approach from Goldman to expanding its deposit base, is looking to attract "world-class talent" to run its retail banking business.
Goldman plans to increase its deposit base organically, through third-party distributors and acquisitions, its chief executive officer, Lloyd Blankfein, said at the Merrill Lynch conference Tuesday.