Morgan Stanley plans to conduct a second round of layoffs by the end of June as its investment banking division and trading division plunge.

The firm initially announced that it would lay off around 1,600 employees, around 2% of its staff, in December 2022 after fears of a recession swelled, according to Bloomberg. 

The latest wave will affect 3,000 employees, or around 3.6% of its workforce. 

The announcement came after Morgan Stanley released its first-quarter earnings report, showcasing a 24% decline in investment banking revenues, a 14% decrease in equity net revenues and a 12% decrease in fixed-income net revenues. At the same time, its wealth management business continued to grow.

In making this move, the firm will join other large corporations from the technology sector and financial sector, which both announced massive layoffs throughout the year. 

During the COVID-19 pandemic, favorable economic conditions resulted in a boom in capital market activities such as initial public offerings. But the surge in activity led to firms being understaffed, causing a hiring spree and giving employees the upper hand against management, according to CNBC. 

Conditionally, Morgan Stanley CEO James Gorman has pushed for a total return to working in the office. He noted that “if you can go into a restaurant in New York City, you can come into the office.” 

Since the pandemic’s severity has lessened and economic conditions have worsened, firms are conducting mass layoffs.

“You know, this gets back to the nature of Wall Street, which is that it’s a boom and bust, it’s a feast or famine business,” Hugh Son, a banking journalist, said on CNBC. “When it’s raining, you have to, obviously, try to collect as much of the revenue as possible. Look, the people who run Wall Street know their street; they know very well it’s very pro-cynical and still can’t do anything to cushion that, because when the deals are coming, you have to have your people.” 

As fears of a recession continue to grow, deal markets have continued to spiral downward. The IPO market down 34% and the mergers and acquisition market down 40%, according to data from Dealogic. 

According to Fortune, Gorman said underwriting and mergers activity has been subdued. He is not expecting a rebound before the year’s end. 

The cuts are expected to impact the banking division and trading division, while financial advisors and personnel in the wealth management division will remain relatively safe.

But under Gorman’s tenure, Morgan Stanley’s wealth management division has grown significantly, making up for some investment banking and trading losses.

“The investments we have made in our Wealth Management business continue to bear fruits as we added a robust $110 billion in net new assets this quarter,” Gorman said in a statement. 

“Equity and Fixed Income revenues were strong, although Investment Banking activity continued to be constrained. We maintained our strong capital levels and remain well positioned to provide long-term value to our shareholders.”