Morgan Stanley "maniacally" focused on cost cuts: CEO

Tue Jun 12, 2012 4:03pm EDT

The headquarters of Morgan Stanley is pictured in New York June 1, 2012. REUTERS/Eric Thayer

The headquarters of Morgan Stanley is pictured in New York June 1, 2012.

Credit: Reuters/Eric Thayer

(Reuters) - Morgan Stanley (MS.N) is "maniacally focused" on cutting costs apart from compensation and is on track to reduce expenses by $500 million this year, Chief Executive James Gorman said on Tuesday.

Gorman, speaking at a conference in New York, also reiterated Morgan Stanley's plans to reduce costs by $1.4 billion annually over the long term.

"We are maniacally focused on non-comp expenses," said Gorman.

He said the investment bank would achieve those cost-cutting goals in part by merging data centers and merging wealth-management offices, which would reduce real-estate and other non-compensation costs.

The bank is also monitoring the size of its overall payroll for possible job cuts as revenue remains under pressure from a weak market environment, he said.

"We are very, very focused on that, obviously, in this environment," said Gorman.

Morgan Stanley cut 2,925 jobs between the first quarter of 2011 and the first quarter of this year.

Gorman's presentation focused mostly on how Morgan Stanley has changed its risk profile in the years since the financial crisis, and came as Wall Street awaits word from Moody's Corp (MCO.N) about rating downgrades of global investment banks. Morgan Stanley is at risk of a ratings cut of up to three notches, which would leave the company at Baa2, just two steps above "junk" status.

Any of the threatened ratings cuts would result in a "manageable outcome," Gorman said. What matters is how market perception changes after the downgrade occurs, which may be affected by how much Morgan Stanley's rating is lowered relative to its peers, he said.

"We're not panicked over this but we're prepared for it and we'll make whatever business adjustments are necessary once we get there," said Gorman.

(Reporting By Lauren Tara LaCapra; editing by John Wallace and Gunna Dickson)

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Comments (2)
neahkahnie wrote:
Of course, this “maniacal” cost cutting DOES NOT include compensation. God forbid, we should cut compensation.

Jun 12, 2012 4:02pm EDT  --  Report as abuse
He could immediately cut $10.5 million by eliminating his own oversized paychecks (that was for 2011). How is it better to put 2,925 more people out of work than for him to “sacrifice” some of his own greed? Is that really what shareholders would respect as professional executive management?

Jun 12, 2012 7:16pm EDT  --  Report as abuse
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