Morgan Stanley plans broad job cuts

By Jonathan Stempel

NEW YORK (Reuters) - Morgan Stanley (MS.N) announced plans to cut 10 percent of staff in its institutional securities unit, its main business, and 9 percent in asset management as it copes with a deteriorating economy, disrupted capital markets and falling asset values.

The cuts are in addition to roughly 4,800 jobs eliminated since the middle of 2007 by what was once Wall Street's second-largest investment bank. More than 100,000 financial services jobs have been eliminated worldwide over that time.

It was not immediately clear how many Morgan Stanley employees will be affected by the latest cuts, announced on Wednesday, or over what time period. A spokeswoman declined to comment. The company said it employed 46,383 people as of August 31.

"We're in a period of tremendous dislocation," Co-President James Gorman said at a Merrill Lynch & Co financial services conference. "We're very mindful of the environment that we live in at the moment."

Morgan Stanley announced its job cuts less than two months after converting into a bank holding company in the wake of Lehman Brothers Holdings Inc's (LEHMQ.PK) bankruptcy.

Goldman Sachs Group Inc (GS.N), Morgan Stanley's main rival, also became a bank holding company in September. It recently began reducing its staff by 10 percent, equal to nearly 3,300 jobs. Both companies are based in New York.

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Gorman said Morgan Stanley plans to "reshape" operations in commercial real estate origination, prime brokerage, principal investments and proprietary trading.

In contrast, he said the bank plans to maintain or expand operations in capital raising, cash trading, commodities, corporate credit, equity derivatives, foreign exchange, mergers and acquisitions, and rates.

Gorman said the bank also plans to bulk up in retail banking, including "targeted" acquisitions.

Morgan Stanley later on Wednesday announced the hirings of Cece Sutton as president and Jonathan Witter as chief operating officer of its retail banking unit.

Both join from Wachovia Corp's WB.N well-regarded retail banking unit, where Sutton was head of retail and small business banking, and Witter was head of distribution. Wachovia is being acquired by Wells Fargo & Co (WFC.N).

In afternoon trading, Morgan Stanley shares fell $1.27, or 9 percent, to $12.81 on the New York Stock Exchange. They began the year at $53.11.

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The holding company structure requires the companies to reduce risk, likely cutting into profitability.