Morgan Stanley (MS) is reducing pay for senior investment bankers and traders by an average of 20 to 30 percent for 2011, Bloomberg said citing people with knowledge of the decision.
The pay cuts will reportedly affect employees on the executive director level and above.
The investment banking giant's decision is said to be part of it effort to curb mounting compensation costs. Earlier this week, reports said that the company is planning to reduce employee bonuses sharply and to restrict cash payouts to $125,000.
The company also intends to defer payout for 2011 to as far as the end of this year, after a quarter saw weakness in trading and investment banking businesses in general.
On Thursday, Morgan Stanley reported a loss for the fourth quarter, reflecting a $1.7 billion settlement with bond insurer MBIA Inc. to resolve lawsuits related to credit default swaps and a 40 percent drop in investment banking revenues. Investment banking revenues dropped 40 percent to $1.05 billion, while trading revenues grew by 13 percent to $969 million.
Financial services firms in general have suffered in terms of trading and investment banking revenue in the fourth quarter. JP Morgan Chase & Co. (JPM) last week reported a 30 percent fall in investment banking revenue.
Goldman Sachs Group, Inc. (GS) also reported a 56 percent decline in profit for the fourth quarter, reflecting a drop in investment banking revenue due to the weak capital markets and Europe's ongoing debt crisis.
MS closed Thursday's regular trading at $18.28, up 5.36 percent on the NYSE.
by RTT Staff Writer
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