According to the Wall Street Journal there's one place on Wall Street you don't want to be at the moment: in a business that is a capital hog under new Basel III rules. Banks and brokers are cutting expenses and staff as financial-market upheaval continues. Morgan Stanley became the latest example, saying Thursday it will cut about 1,600 jobs, or 2.6% of total head count.
The investment house won't be cutting from its ranks of 17,000-plus financial advisers. Equities businesses shouldn't feel too much pain either because they have been having a good year. More at risk are likely to be parts of the firm's fixed-income business that are capital intensive or will be penalized under coming Basel capital rules. This would mean areas like correlation trading, securitization or structured credit.
Basically, if a firm has to hold a lot more capital under Basel III for a business, there's a good chance it will look to exit it or at least pare the business back…..
For more go to http://online.wsj.com/article/SB10001424052970204844504577100560607147608.html
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