02/18/2011

Purges Coming at Deutsche, Morgan Stanley

Deutsche Bank and Morgan Stanley plan to push out some of their poorest-performing securitization staffers.

Market players expect the housecleaning efforts to take place over the next month, targeting specific personnel at various levels across the banks' asset- and mortgage-backed bond underwriting and trading desks. Some will be laid off. Others will receive only small annual bonuses, with the notion that those individuals will get the picture and leave on their own.

However, neither bank is planning to cut back its overall involvement in the securitization field from current levels. One source instead characterized the efforts as modeled after a process in which Goldman Sachs routinely culls a set percentage of the worst performers from each of its departments.

The idea, in part, is to make room for fresh blood. Indeed, Deutsche staged a

similar effort in October and November — dismissing an undisclosed number of staffers whose work wasn't up to par and replacing them with new recruits.

Word of the upcoming cuts at Deutsche and Morgan Stanley began to circulate among market players at the American Securitization Forum's “ASF 2011” conference in Orlando on Feb. 6-9, and it appears the moves are timed to coincide with plans by the banks to award annual bonuses in the next two weeks.

Industry players say it's no surprise the banks want to remove dead weight. Like most of their peers, both terminated swaths of securitization staffers following the 2007 market crash, and they remain quick to single out personnel perceived as weakening their operations. ?

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