More Wall St. Bloodbath: Morgan Stanley To Lay Off 20% Of Managing Directors By Year End

A well-placed source close to the firm tells us that Morgan Stanley will have to fire 20% of the managing directors in research by the end of the year.

Morgan Stanley names around 210 - 240 new managing directors per year, and in 2006, a research paper by the University of Chicago Booth School of Business estimated that Morgan Stanley employed around 780 managing directors, only 10-15% of which are probably in research, to give you a rough idea of how many managing directors will lay off this year.

Firing the bottom 5% or 10% of performers in the second half of the year is not unusual at Wall Street firms, and this year, banks especially have been cutting their work force more aggressively in what they call "RIFs" or "reductions in workforce."

So this isn't shocking -- the layoff carnage that's about to hit Wall Street is well documented -- but we're now starting to see more specifically where the layoffs will hit.

In fact Charlie Gasparino earlier this summer said that Morgan Stanley had been running layoff scenarios into the thousands. Ruth Porat, Morgan Stanley's CFO, suggested the layoffs would hit more people than just Morgan's brokerage last month and Reuters reported that potential job cuts would come "come on top of a reduction of about 300 brokers during the first quarter."

MORE BAD NEWS : http://money.msn.com/top-stocks/post.aspx?post=22706ccb-8a83-4cd8-b662-0fb43749f5e0

30,000 HSBC layoffs only the beginning

In July, as financial-sector layoffs mounted, a top executive search firm estimated as many as 80,000 jobs might go in this coming round of financial layoffs.

“This is kind of like the beginning of a tsunami,” said Richard Stein of Caldwell Partners. “You don’t get it in one go — it comes in sort of short shock waves.”

Financial-sector layoffs have reached a fever pitch as bank earnings have rolled out. Just a few of the announcements include:

•Barclays (BCS), another top England bank, announced it will lay off several hundred workers soon in addition to 600 earlier in the year.

•Switzerland’s UBS (UBS) has been rumored to be considering layoffs of up to 5,000 people in July.

•Credit Suisse (CS), another Swiss bank, plans to ax about 2,000 staffers, mostly in Europe, despite weathering the financial crisis better than eurozone peers.

That’s a staggering total, and it doesn’t include layoffs we haven’t had confirmed or had leaked to the press yet. And if you haven’t noticed, most of those big banks are abroad.

So the nagging question is not whether Wall Street will take a similar hit but when.

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Not suprising for this to happen. Looking around, one can see more office space being needed to support COOs and bureaucrats across the organization, even more so in business than in IT/Back Office. We producers like to joke about the layers being added in and recent mergers with other entities always results in narrower or overlapping job definitions.

One Taiwanese bank where I knew people, sold off one of their main entities. Instead of saying goodbye, they promptly brought a large number of people over before the merger completed and then cut everyone’s responsibility in half. Even GS is bloated in spots with too many managers.

On the bottom, there are always enough idiots who manage to survive the first few years, but once the knives come out, they are really exposed.

GS also declared that they are moving a number of business people from NY to Singapore (they were not the first to see the value of the fascist corporate state with low taxes). As the UK and the US continue to flounder, expect to see more pushing to move people out to Bombay, Singapore and Shanghai.

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