Morgan Stanley cuts 1,000 mortgage jobs

By Joseph A. Giannone

NEW YORK (Reuters) - Morgan Stanley will slash 1,000 jobs, scale back its U.S. home-lending business and shut down a British mortgage unit as new management takes a hard look at the continued deterioration in mortgage markets.

The cuts announced on Wednesday affect Morgan Stanley employees who generate home loans through brokers and other third parties, as well as bankers who packaged these loans into bonds. The bank declined to detail cuts for specific areas.

Including the latest moves, Morgan Stanley has laid off 2,900 people in mortgages, wealth management, investment banking and capital markets since October. That's 6 percent of Morgan Stanley's 48,256 employees at the end of November.

The latest job losses are part of a series of cutbacks on Wall Street that indicate investment banks don't expect the mortgage crisis to end soon.

"For anyone expecting a housing market recovery, you have to push out your expectations," said Keith Wirtz, president and chief investment officer at Fifth Third Asset Management in Cincinnati. "We see 2011 as the earliest when the market will get back to a good footing."

Morgan Stanley also is closing its British mortgage origination business, but will continue servicing loans through its Morgan Stanley Mortgage Servicing Ltd unit. British mortgage approvals for house purchases in December fell for a seventh consecutive month to the lowest level since 1999.

Morgan spokesman Mark Lake said many of the people being cut would be informed on Wednesday. Costs related to these moves will be immaterial to earnings, he said.

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