Morgan Stanley is to seek $1 billion in costs cuts through a combination of outsourcing, technology streamlining, and expense reduction measures.
The overhaul, dubbed 'Project Streamline', was outlined by chairman and CEO James Gorman at an investor presentation Tuesday. In an economic environment characterised by modest revenue growth, the bank is looking at expense efficiencies as a means to boost its ROE from 7% to a stated target of 9-11%.
In an initiative aimed at generating $100 million in annual savings, the bank plans to shift 1250 back office jobs away from high cost locations to cheaper offices in cities such as Bengalaru, Glasgow and Baltimore.
Another $150 million is expected to be shaved from the bottom line by cutting contractor pay and professional services spend by as much as seven percent per annum.
In technology, Gorman said the firm will almost halve the number of servers deployed, from 60,000 to 48,000 by the end of the year, arriving at a total of 33,000 through 2017. Data centre numbers will also be slashed, from nine to five across North America.
Other savings will be met by reigning in non-essential travel expenses and by keeping a lid on executive pay and bonuses.
“Project Streamline is not to be underestimated,” Goram reassured investors. “This is a full-throated effort.”