Morgan Stanley now owns 65 percent of the brokerage after paying Citigroup Inc. $1.89 billion for an additional 14 percent stake in September following a two-month fight over the value of the venture. The two banks agreed on a valuation for the purchase of the remaining 35 percent stake, which Morgan Stanley must acquire by June 2015. The firm will probably ask the Federal Reserve for approval to purchase the rest next year, a person briefed on the bank’s thinking said in October.
The brokerage is seeking to boost revenue through more lending and moving additional client assets into managed accounts, Fleming said. The average annualized revenue per adviser in the third quarter was $790,000. About 1,900 of the firm’s 16,829 brokers produce more than $1 million in annual revenue, he said.
Morgan Stanley tweaked the pay structure last year as well. The firm raised the minimum amount of revenue a broker must generate to avoid pay cuts to $300,000 from $250,000. It also reduced bonuses based on revenue production by 1 percentage point across the board, while introducing new bonuses for bringing in assets and making loans to customers, a person briefed on the plan said at the time.
Employees across Wall Street are facing pay cuts or losing their jobs as revenue growth wanes and shareholders demand higher returns. JPMorgan Chase & Co.’s bonus pool for its corporate and investment bank may shrink as much as 2 percent this year as the firm completes performance reviews, three executives with direct knowledge of the process said yesterday.