12/15/2011 09:27 am ET | Updated Feb 14, 2012

Morgan Stanley Cuts: Company To Lay Off 1,600 Employees Early Next Year

(Adds background on job cuts, earnings predictions)

By Lauren Tara LaCapra

Dec 15 (Reuters) - Morgan Stanley will cut
1,600 employees in the first quarter, the bank said on Thursday,
as it trims costs in a difficult period for trading and banking

The job cuts will come across all staff levels and
geographic areas, spokesman Mark Lake said, including investment
banking, trading and back-office functions.

Morgan Stanley is one of the last big Wall Street banks to
announce major job cuts as analysts have begun slashing
fourth-quarter earnings estimates.

Other banks, including Goldman Sachs Group Inc,
JPMorgan Chase & Co, Bank of America Corp and
Citigroup Inc have already outlined plans to cut thousands
of jobs this year. Morgan Stanley had kept firings limited to
several hundred underperforming financial advisers earlier in
2011, but is now extending the cuts to banking and trading.

The cuts represent less than 2 percent of Morgan Stanley's
workforce at Sept. 30 and come as the European debt crisis
continues to add stress to the markets.

Trading and dealmaking volumes have been hurt by volatile
markets. At the same time, the value of securities banks hold
for investments, clients or market-making purposes have
declined, further hitting revenue and earnings.

Morgan Stanley is likely to report a loss in the fourth
quarter, according to analyst reports this week, due to a
special $1.2 billion charge the bank announced this week,
related to a settlement with the bond insurer MBIA Inc.

Even excluding that charge, Morgan Stanley will earn just 15
cents per share for the fourth quarter, Atlantic Equities
analyst Richard Staite predicted in a report on Thursday. That
compares with 41 cents per share in the year-ago period.

(Reporting By Lauren Tara LaCapra; Editing by Derek Caney, Dave