NEW YORK — Morgan Stanley plans more layoffs but is also preparing to launch a retail banking business.
The investment bank will lay off 10% of its institutional securities professionals, said Colm Kelleher, chief financial officer at Morgan Stanley, speaking at Merrill Lynch's banking and financial services conference.
The firm has already cut about 10% of its workforce overall this year. These cuts are in addition to those, Kelleher said.
The bank also plans on reducing head count by 9% within the asset management business globally, but will continue to grow its global wealth management business.
The bank recognizes that performance in asset management has been "mixed" and plans on "instituting greater expense discipline," said James Gorman, co-president of Morgan Stanley.
The bank is taking steps to improve its asset management business by "closing and consolidating non-performing, sub-scale and overlapping products," Kelleher said.
The prime brokerage business has been affected by the difficult market conditions, and Morgan Stanley is in the process of "reengineering" that business.
Morgan Stanley, along with Goldman Sachs Group Inc. became a bank holding company in September. However, Gorman said the bank does not expect "material changes in the day-to-day businesses." Kelleher said the company "welcomes" increased regulations by the Federal Reserve and others despite the higher costs that would result.
One benefit of bank holding status is that bank deposits could lower the cost of funding. Morgan Stanley has been growing its deposit base and plans on launching a retail banking line. Gorman said the bank will leverage its 450 existing branches and force of 8,500 financial advisors. New bank products and new channels of business will be launched, he added.
Morgan Stanley, which is taking a different approach to expanding its deposit base than Goldman, is looking to attract "world class talent" to run its retail banking business, and announcements on hires will be made shortly. Goldman plans to increase its deposit base organically, through third-party distributors and acquisitions, said Chief Executive Lloyd Blankfein, presenting at the Merrill conference Tuesday. Goldman has "no intention to have branch banking in multiple states," Blankfein said.
Morgan Stanley secured a $9 billion investment from Mitsubishi UFJ Financial Group Inc. last month, but the deal is a strategic alliance as well. The strategic alliance will focus on corporate and investment banking activities, and allow Morgan to enhance its footprint, said Kelleher.
Kelleher noted that as part of Mitsubishi's due diligence in investing in the bank, it hired BlackRock, Inc. as an external advisor to look at Morgan's valuations.
Morgan Stanley stock recently was trading down 4.9% at $13.39 a share.