Morgan Stanley, which posted a sharp drop in second-quarter revenue,...

Morgan Stanley, which posted a sharp drop in second-quarter revenue, expects its payroll to decline by about another 1,000 workers this year. Above, the bank’s Manhattan headquarters. (July 19, 2012) Credit: Bloomberg Victor J. Blue

Morgan Stanley became the latest bank to announce more layoffs to shrink expenses as Wall Street prepares for an extended period of weak global economic growth and low trading and deal-making volumes.

The investment bank, which posted a sharp drop in second-quarter revenue, expects its payroll to decline by about another 1,000 workers this year to meet a broader target of reducing staff levels by 7 percent from December 2011 levels, chief executive James Gorman said Thursday.

Morgan Stanley is one of several big banks to outline further belt-tightening measures this week when reporting quarterly results. The industry is facing increasing pressure from shareholders to boost profitability as the European debt crisis, companies' reluctance to issue debt and equity, and slow stock and bond trading weigh on revenue.

Rivals including Goldman Sachs, Bank of America and Deutsche Bank are also embarking on fresh rounds of staff cuts in their trading and underwriting businesses. Goldman expanded its cost-saving target by $500 million as the outlook has dimmed for near-term revenue growth.

"People have gotten more aggressive on containing costs than they had been a month or two ago," said Alan Johnson, a Wall Street compensation consultant. "You look out into the future and it just doesn't look like it's going to get better any time soon."

So far this year, U.S. banks have outlined plans to cut another 17,323 employees, in addition to the 63,624 job cuts detailed last year, according to outsourcing firm Challenger, Gray & Christmas.

Morgan Stanley is targeting a workforce reduction of 7 percent from the 61,899 employees it had at the end of 2011, Gorman said on a conference call with analysts. At June 30, Morgan Stanley had 58,627 workers, leaving it with around another 1,000 left to go.

The bank will achieve its goal through staff cuts and "applying a very high bar" for replacing workers who leave, Gorman said.

Times are tough enough that the bank is shrinking its balance sheet, too. Morgan Stanley hopes to cut its risk weighted assets by 30 percent by December 2014 from their Sept. 30, 2011 levels of about $347 billion.

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