U.S. investment banks are thinning the ranks of their specialty sales staffs as they look for ways to cut costs without limiting future revenue potential.
Specialty sales staff, who typically explain complicated products to the marketers that deal directly with private banking clients, are often seen as more expendable because they don't deal directly with customers, experts said.
Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) has recently laid off marketers who focused on pitching bonds with embedded derivatives to private bankers, who would in turn sell the securities to wealthy clients, people familiar with the matter said. Other banks have taken similar steps recently, according to recruiters.
Experts said specialty marketers are the sales staff most likely to be laid off. At investment banks that have large brokerages and private banks, these sales teams can make up to around 60 percent of an equity derivatives division, while the numbers might be closer to 20 percent at investment banks that have smaller retail banking networks.
"When you need to ratchet down costs, you are loath to do anything to the people closest to clients, because you don't want to injure that revenue stream in any way. The further away you are from that relationship, the greater the risk of your being laid off," said Michael Holland, founder of Holland & Co, which oversees more than $4 billion of assets in New York.
This sentiment has been echoed by Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) Chief Executive John Thain. Thain said in a conference call discussing first quarter earnings that the firm is reducing headcount by 10 percent - excluding its financial advisors. Retaining this "industry leading team" is seen as crucial, said Nelson Chai, Merrill's chief financial officer.
Financial institutions globally are facing pressure to cut costs after more than $400 billion of asset writedowns have triggered big quarterly losses, or at least reductions in profits.
According to outplacement firm Challenger, Gray & Christmas, the financial sector announced more than 65,000 layoffs in the first five months of 2008, after announcing more than 150,000 layoffs in 2007.
In the spring, Morgan Stanley wound down an internal sales group of around two dozen, including two senior managing directors, Jean Paul Armenio and Marie Mole, a person familiar with the matter said. Morgan Stanley declined to comment about specific downsizing, but said it is always evaluating its staffing.-Reuters.com
Specialty sales staff, who typically explain complicated products to the marketers that deal directly with private banking clients, are often seen as more expendable because they don't deal directly with customers, experts said.
Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) has recently laid off marketers who focused on pitching bonds with embedded derivatives to private bankers, who would in turn sell the securities to wealthy clients, people familiar with the matter said. Other banks have taken similar steps recently, according to recruiters.
Experts said specialty marketers are the sales staff most likely to be laid off. At investment banks that have large brokerages and private banks, these sales teams can make up to around 60 percent of an equity derivatives division, while the numbers might be closer to 20 percent at investment banks that have smaller retail banking networks.
"When you need to ratchet down costs, you are loath to do anything to the people closest to clients, because you don't want to injure that revenue stream in any way. The further away you are from that relationship, the greater the risk of your being laid off," said Michael Holland, founder of Holland & Co, which oversees more than $4 billion of assets in New York.
This sentiment has been echoed by Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) Chief Executive John Thain. Thain said in a conference call discussing first quarter earnings that the firm is reducing headcount by 10 percent - excluding its financial advisors. Retaining this "industry leading team" is seen as crucial, said Nelson Chai, Merrill's chief financial officer.
Financial institutions globally are facing pressure to cut costs after more than $400 billion of asset writedowns have triggered big quarterly losses, or at least reductions in profits.
According to outplacement firm Challenger, Gray & Christmas, the financial sector announced more than 65,000 layoffs in the first five months of 2008, after announcing more than 150,000 layoffs in 2007.
In the spring, Morgan Stanley wound down an internal sales group of around two dozen, including two senior managing directors, Jean Paul Armenio and Marie Mole, a person familiar with the matter said. Morgan Stanley declined to comment about specific downsizing, but said it is always evaluating its staffing.-Reuters.com
