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27 Nov, 2008 12:13

Morgan Stanley cuts 25% of jobs in Russia

Morgan Stanley cuts 25% of jobs in Russia

US investment bank Morgan Stanley is shedding one in four jobs at its Russian office in a bid to cut costs, Russian daily Vedemosti reports.

The bank hasn’t announced the lay-offs yet, but an insider at the company, who’s lost his job, insists it’s true. 

“Ten of twenty sales managers and traders, whom I know, were dismissed. I do not know if the same happened to the investment department, but for certain reductions have undoubtedly taken place there, and if so it makes more than a quarter of office,” the source said.

However, an unnamed top manager at the bank disputed the extent of the cuts.

“Of course less than 25 per cent are dismissed, but the situation depends strongly on the area. The management recognised that it was necessary to make reductions at once but in a proper way”.

The head of the Russian division of Morgan Stanley, Rair Simonyan, has said the US bosses of the bank had demanded a 10 per cent cut in the number of employees at all its banks worldwide. However, Simonyan refused to say how many staff in Russia had lost their positions. Simonyan insisted that Russia remains a strategic priority for Morgan Stanley.

In November Morgan Stanley announced an additional 2,000 job cuts globally. That cane on top of a earlier decision to axe 4,400 employees.

At the Moscow office of Goldman Sachs, another US investment bank, about 10 per cent of the employees have been made redundant.  The Russian operation is now staffed by about 100 people.

Morgan Stanley and Goldman Sachs are victims of the credit crunch which has wreaked havoc in the global financial system and is now affecting real economies across the world. It began in the sub-prime mortgate market last year.

At the end of September Morgan Stanley and Goldman Sachs were given permission by US financial regulators to change their status from investment banks to banking groups.

Banks around the world have already dismissed more than 150,000 people since the beginning of the financial crisis.

A senior Russian banking official said: “those who have been dismissed have few chances of finding a new job before the beginning of the next year”. 

“The situation in Russia now is no easier than in other markets. Large transactions are hardly possible in the near future. Therefore the basic duty of investment bankers will be, probably, to help companies in re-structuring their businesses to make them more effective. But such work doesn’t earn them much”, he said to Vedomosti.

As the credit crunch forces massive staff cuts, Russian banks have stopped issuing credit to people working in finance.  They consider such jobs to be high risk.

According to analysts CTPartners, the sixth biggest headhunting agency in the world, the number of dismissals will increase in the financial sector in the near future.

By the middle of 2009, the total number of jobs lost is expected to rise to 350,000 people, twice the number at the beginning of the credit crunch.

CEO of CTPartners agency Bryan Selliven told Bloomberg: “It is a financial equivalent of the Second World War, it is unprecedented”.