Morgan Stanley has a massive workforce reduction plan for its Asian division

Morgan Stanley, a leading lender, has allegedly set in motion a major workforce reduction plan aimed at its Asia division. One portion of the plan includes severing ties with six managing directors that worked for the company, and most of them were leading Morgan Stanley’s banking operations in China.

According to the bank, the decision comes after the region suffered a difficult economic climate. Recent tensions between China and the US did not help the matter, but instead it hindered deal-making. Now, Morgan Stanley is planning 3,000 job cuts in the region, according to anonymous insiders.

Morgan Stanley has dismissed several managing directors in China

The unnamed individuals familiar with the matter have reported that some key players, such as Clarence Kwok, Tony Yin, and Julia Xiao were among the dismissed managing directors. Kwok is an expert in Chinese acquisition and mergers, Yin is a specialist for technology coverage, while Xiao is a figurehead in corporate finance. It is also worth mentioning that many of the dismissed senior bankers were only occupying their respective positions for a short time, often less than two years.

The move will mean a rather deep cut for Morgan Stanley, despite the fact that it was the company’s own decision. For years, the bank maintained a large team in the region. Given that China is the world’s second-largest economy, this does not come as a surprise. However, the country’s economic recovery ended up being slower than expected. This led international investors to shy away from the market.

Combining these factors with the recent tensions led to a significant market downturn when it comes to Morgan Stanley’s deal-making activity.

Thousands of job cuts are on the way in Asia

Some reports have revealed that the New York-based company started notifying affected employees last week, including those in Hong Kong, Beijing, and Shanghai. However, the major 3,000 job-cut comes as a part of the company’s broader downsizing strategy. In doing so, Morgan Stanley will effectively eliminate as much as 7% of its Asia-Pacific investment banking staff.

The company’s goal is to trim its workforce in the area by 3,000 employees, and to do it by the end of the current financial quarter. This would equal around 5% of its total workforce, not including financial advisors and support staff in the wealth management division.

This is also not the only move of this kind that the bank has performed in recent history. Only last year, Morgan Stanley cut 50 investment banking roles in Asia; once again, a large chunk of them were in China.

However, the record-holder in job cuts remains UBS, which plans to remove 36,000 positions, mostly affecting employees from Credit Suisse.