The job cuts will affect 1,600 positions at the global investment bank, which currently employs more than 81,000 employees.

Anonymous sources with knowledge of the layoffs told CNBC that the cuts will affect "nearly every corner" of the bank.

The sources said financial advisors are one of the few categories of workers exempt from the cuts.

It follows workforce reductions at other banking giants including Goldman Sachs, Citigroup, Barclays.

Banks typically cut between 1% to 5% of those they deem as "underperformers" every year before bonuses are paid, leaving more money for remaining employees.

The annual cull, or "reduction in force" as it’s known, was paused in 2020 because of the pandemic. The last firm-wide reduction in force at Morgan Stanley was in 2019.

The bank’s employee ranks surged by 34% from the first quarter of 2020 to the third quarter of this year due to robust activity.

CEO James Gorman told Reuters last week that the bank was gearing up for “modest cuts,” but declined to cite specific timing or the magnitude of the dismissals.

“Some people are going to be let go,” Gorman said. “In most businesses, that’s what you do after many years of growth.”

Headcount at JP Morgan’s investment bank, Goldman Sachs and Morgan Stanley jumped by 13%, 17% and 26%, respectively, in the past two years amid a hiring binge. 

Due to a confluence of factors such as uncertainty caused by the Ukraine war and and a potential recession looming, capital markets revenue have slumped.

A report yesterday by Bloomberg suggested that JP Morgan Chase, Bank of America and CitiBank are all considering plans to slash by 30% the pools they use to pay bonuses to investment bankers, citing people familiar with the discussions.

Reward Strategy has contacted Morgan Stanley for comment.