“Big securities firms are continuing to cut staff around the world, despite signs of a gradual recovery in financial markets,” writes Erik Portanger in today’s Wall Street Journal.

“Switzerland’s UBS AG — which owns the former UBS Warburg and PaineWebber, both now rechristened UBS — is the latest to conduct a fresh round of job cuts. It is laying off about 500 staff world-wide as a result of concerns about the outlook for stock-market and merger-related activity.”

“Other brokerage firms and banks, including Morgan Stanley and Citigroup Inc., also have either trimmed staff levels or are in the process of doing so, said people familiar with the situation. Citigroup began handing out pink slips earlier this week to midlevel and senior investment bankers and is expected to shed 50 or more jobs world-wide over the next few days, people familiar with the matter said.”

“A company spokeswoman declined to comment.”

“The pruning comes as U.S. and European stock markets have rebounded from their lows for the year and signs are emerging of a gradual pickup in initial public offerings of stock and takeover activity. But far from being optimistic about the prospects for a swift market upturn, many securities firms believe any recovery will be precarious and ultimately fall well short of the boom conditions of the late 1990s. Some note that while the recent bounce in deal making represents a pickup from earlier this year, overall activity has barely improved since its level a year ago.”

“The upshot is that employment levels are likely to continue to fall. Securities firms have slashed more than 80,000 jobs, or 11% of the work force, since April 2001. The cuts are even deeper at some of the bigger firms. Wednesday, Morgan Stanley announced that its work force has dropped 16% to 53,507 over the past approximately two years. The firm said that by year’s end, its headcount will likely be down marginally.”

” ‘We have braced ourselves for leaner and meaner times and to gain market share on that basis,’ says Klaus Diederichs, head of European investment banking at J.P. Morgan Chase & Co. in London. ” ‘We are mildly optimistic that we will see growth of about 10% to 15% in the next 12 to 18 months — but not 50%” in investment-banking revenue. ‘ “

“UBS spokesman David Walker said the bank’s latest cuts represent about 3% of its investment-banking work force. ‘We regularly review our cost structure and staffing levels with the objective of balancing costs versus growth, and have decided to reduce our work force in line with market conditions,’ he said. Mr. Walker noted that UBS also is continuing to hire in ‘strategically important’ areas, such as U.S. investment banking and fixed income.”