Uncertain future for equity researchers at Morgan Stanley?

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Life could be about to get interesting for Morgan Stanley's equity researchers: there is speculation that the division could be heavily slimmed down.

The website Breakingviews.com suggests the division could even face the chop. Following the recent decision to disband its emerging markets bond team, and given chief executive John Mack's need to make an impression after returning to the bank, it predicts changes are on the cards.

Breakingviews cites research by Citigroup suggesting that Morgan Stanley spent $450m on research in 2004, making it a costly accessory now that researchers can't help win corporate finance mandates. However, rather than obliterating the division entirely, it says the bank may follow the model adopted by Goldman Sachs, which has fewer analysts than previously, each covering more stocks.