Morgan Stanley To Hand Out 1,600 Pink Slips

Market turmoil caused by economic weakness and European fallout continues to wreak havoc on Wall Street. Big banks look to counteract by providing support to their public valuations and increasing operating efficiencies. The sixth largest investment bank by assets, Morgan Stanley

, announced today that it was planning to right-size its operations to the tune of 1,600 employees by the end of the first quarter of next year. That is 2.6 percent of its 62,648-strong workforce at the end of September, according to financial reports combed through by

.

subscribers were alerted to this development in real time. The banking giant is not the only one having to trim the fat in these tumultuous times. Cuts are expected to reach 200,000 globally among financial first, according to Bloomberg. Wall Street alone is expecting 10,000 jobs to be wiped out in 2012, New York Comptroller told

. Just last week, Benzinga reported that

, the third-largest investment bank in the nation; announced cuts of 4,500 positions. Similarly, we reported that

was looking at cutting 2,000 jobs by 2016. Having cut several hundred underperforming financial advisors earlier in the year, Morgan Stanley's downsizing is now spreading to its banking and trading operations, as deal-making and trading revenues see new lows on increased market volatility. Morgan Stanley was further pressured into the cuts as it is significantly underperforming in terms of its bottom line. The company announced early in the week that it was taking a one-time hit of $1.2 billion on a settlement with bond insurer MBIA

. Earnings per share, even at an ex-charge $0.15 per share, are down significantly from the $0.41/share in the same quarter a year ago, according to

. Morgan Stanley has made the layoffs a performance-related issue as it says cuts are derived from year-end personnel evaluations across its divisions and geographies. More than an exact performance-gap metric, however, these 1,600 jobs are supposed to pick up the slack for missing catalysts for markets to hold on in a year that has seen the company valuation halved. While it is to an open debate how much of the percentage evaporated from value is a company weakness (underperformance) and how much it is market threats, the market will interpret the 2.6 percent correction in the right light. MS bounced to nearly $15.60 a share before settling (at the time of writing) to a more levelheaded $15.15, about 0.6 percent improvement on yesterday's closing price.