Morgan Stanley has set in motion a massive workforce reduction plan in its Asia division, part of which includes severing ties with six of its managing directors, many of whom were at the helm of its China banking operations. This decision comes amidst a difficult economic climate in the region, exacerbated by escalating China-American tensions that have greatly hindered deal-making.

Morgan Stanley Says Goodbye to China’s Top Bankers

According to anonymous insiders interviewed by Bloomberg, key players such as Clarence Kwok, an expert in Chinese mergers and acquisitions, Tony Yin, a technology coverage specialist, and Julia Xiao, a figurehead in corporate finance have found themselves among the managing directors that were dismissed. It is worth noting that many of the outgoing senior bankers had only received a promotion within the last two years.

Compared to its Wall Street contemporaries, Morgan Stanley's decision to scale down on investment banking roles by focusing on China signifies a particularly deep cut. The firm has long maintained a large team in the region, the world's second-largest economy. Yet China's economic recovery has proven slower than anticipated, and international investors have largely shied away from the market. These factors combined have led to a marked downturn in deal-making activity.

Additionally, Bloomberg reported that the New York-based firm began breaking the news to affected employees across its Asian locations, including Hong Kong, Shanghai, and Beijing, starting last week.

Additional 3,000 Job Cuts Loom at Morgan Stanley amid Deal Drought

As a broader part of its downsizing strategy, Morgan Stanley has initiated the process of eliminating 7% of its Asia-Pacific investment banking staff. This action is seen as a stepping stone towards its objective of trimming around 3,000 positions globally by the end of this financial quarter.

If achieved, this would equate to roughly 5% of its total workforce, excluding financial advisors and related support staff within its wealth management division.

Last year, Morgan Stanley cut around 50 investment banking roles in Asia, a large chunk of which were dedicated to China. This reduction ranked amongst the most substantial when compared to other Wall Street firms over the same period.

However, the record holder in this unenviable field remains UBS, which intends to reduce employment by 36,000 positions. The layoffs will largely affect staff from the recently acquired Credit Suisse, which found itself on the brink of bankruptcy . According to reports, the recent economic turmoil has caused around 540,000 people from economically significant sectors to lose their jobs since October 2022.

Last week, JPMorgan Chase announced, that it plans to lay off 1,000 of approximately 7,000 employees from the bankrupt First Republic Bank (FRB). FRB was purchased by the institution a month ago.