Morgan Stanley to Cut 1,200 Jobs, Take $150 Million Charge

Bloomberg reported last week that Morgan Stanley planned to eliminate as much as a quarter of the fixed-income staff. The bank plans to provide investors with an update on the business, including targets for its capital needs, when it reports results in January, the person said.

While the bank isn't exiting any major business lines within fixed-income trading, it's scaling back in specific areas, the person said. For example, Morgan Stanley is pulling out of most industrial-metals trading, people familiar with the plan said. The bank will still do some custom deals and keep trading precious metals, the people said.

Morgan Stanley has reduced the capital that its fixed-income and commodities unit requires by more than half over the past four years, but still hasn't reached its goal of a return on equity of at least 10 percent. The firm generated $3.75 billion in fixed-income revenue in the first nine months of this year, seventh among major global investment banks, according to data from Bloomberg Intelligence. The firm produced $6.31 billion in equity-trading revenue in that period, most among the banks.

The cuts could provide savings of about $500 million, Mike Mayo, an analyst at CLSA Ltd. who has a buy rating on the stock, said in a note earlier this month. Shares of the company fell 1.2 percent to $34.26 at 11:22 a.m. in New York.