WSJ : Who’s Thinking About a Trip to Europe This Winter? You and Everyone Else

Who’s Thinking About a Trip to Europe This Winter? You and Everyone Else
In many top vacation spots, there is no such thing as an offseason this year

Mykonos in the winter? More travelers are opting to travel trans-Atlantic before summer.

Europe is top of mind for U.S. travelers this year, and they are making trips well ahead of high season, travel advisers say. Normally, trans-Atlantic trips to Europe pick up as weather warms in spring and run through the summer months.

Travelers are booking on both ends of the summer peak season, say airlines and hotel companies. Vacationers in early spring are taking advantage of expiring travel vouchers, cheaper hotel rates and the chance to work remotely in the first quarter before in-office policies change. If vacationing in Europe turns into a year-round affair, it will make it harder to find off-peak deals in 2023, says travel advisers.

Costs range greatly based on the destination, but the average flight from the U.S. to Europe in March costs $857, a 40% increase compared with 2019, according to data from the travel search-engine Kayak. The average flight for June is $1,284, a 27% increase compared with last year.

Demand for travel to Europe is increasing in the midst of rising concern over a potential recession and layoffs. Some travelers headed abroad this spring were priced out of summer trips, travel advisers say, adding that some are motivated by pandemic flight vouchers that will finally expire, and by a desire to avoid the summer heat and airport trouble that occurred last year at several European hubs.

On an earnings call earlier this month, Delta Air Lines President Glen Hauenstein said March is “getting to be a peak month these days” for trans-Atlantic travel this year.

“That leaves you really the nonholiday weeks in November and the nonholiday weeks in January and February as really your lull periods,” he said.

Airline executives said on recent earnings calls that they expect summer 2023 to be a record season. Delta, United Airlines and JetBlue Airways are adding new trans-Atlantic routes ahead of summer.

Travel to Europe from the U.S. has steadily grown since last year. Free of Covid-19 travel restrictions and eager to go on vacation, U.S. tourists flocked there in 2022. The typical summer travel season extended well into the fall months.

Many families traveling now are seeking more than just sightseeing, travel advisers say. Tina Messamore, owner of Latitudes Travel in Murfreesboro, Tenn., says her clients are asking about Europe trips that include cooking classes and educational tours.

“I have had more requests for Europe in the last 12 months than I have in 23 years,” she says. “I had the busiest year ever for Europe in 2022, and 2023 is starting out the same way.”

She and other travel advisers recommend traveling during slower times, such as the fall, if possible.

So far, there are 23% more bookings from the U.S. to Europe for February compared with February 2022, according to Airlines Reporting Corp., which processes tickets sold by travel agencies. It is likely that travel to Europe in 2023 will exceed 2022 levels, says the company.

France, Italy and the United Kingdom are among top destinations for U.S. travelers this coming year, as they have been in the past, says Eduardo Santander, chief executive of the European Travel Commission.

Adam Morvitz, founder and chief executive of point.me, a points and miles search aggregator and booking service, says Greece is among the most popular destinations in both winter and spring, let alone the peak summer period. Mr. Morvitz says his company has already booked as many points and miles redemptions for April trips to Greece as it typically does for June or July.

“It could be in the 60s, there could be a chance of rain and we’re still booking trips to Mykonos,” he says.

Travelers using vouchers that will expire can get more value when pairing points redemptions for an offseason trip. Good redemption rates on nonstop flights to major European cities in business class are available in March, says Mr. Morvitz.

Hannah Gowans and her husband plan to travel to the U.K. this spring after finding a Cyber Monday deal for MileagePlus members on a nonstop United Airlines flight. They will fly from Los Angeles to London for 60,000 miles and $385 in taxes. Typically, she wouldn’t choose to travel in March, but there were limits on travel dates from the sale, and the trip seemed to be a good excuse for the 33-year-old ad tech professional and her husband to take a delayed honeymoon.

Ms. Gowans says her husband has never been to London, and she hasn’t been since 2014. They chose to add Edinburgh to the weeklong trip, and plan to visit a classic summer European city on a different trip.

“I can play tour guide and show him around, then we’ll go enjoy the quieter atmosphere of Edinburgh and enjoy some Scotch,” she says.

If You Are Going to Europe This Year
  • Set expectations for offseason travel. Some smaller hotels, restaurants and shops close for the winter, says Ms. Messamore. But she says there is still a lot to do between museums and other attractions.
  • Be flexible. Look to travel any time from late March through the end of October to find better availability, says Damian McCabe, chief executive of McCabe World Travel in McLean, Va.
  • Build in time. There will be delays, according to a report from Europe’s air-traffic manager, Eurocontrol. The report says it will be difficult to manage airspace issues as the war in Ukraine continues. If you plan to visit several cities by air, make sure you leave plenty of time to get to and from destinations, travel advisers say.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • XM +31.6%, DV +8.5%, STX +7.8%, TSLA +7%, LEVI +5.6%, STM +4.9%, LTRX +4.5%, ETD +4.4%, NOK +3.2%, CVX +2.8%, NKLA +2.6%, URI +2.4%, TSCO +2.4%, TGNA +2.3%, XEL +2.1%, HXL +2%, AXS +2%, CALX +1.8%, BHLB +1.7%, LVS +1.3%, AXTA +1.2%, PLUG +0.9%, MUR +0.9%, ET +0.8%, META +0.7%, LBRT +0.7%
  • Gapping down:
    • FNA -10.1%, FNA -10.1%, SNX -8.7%, WOLF -8%, DEO -6.2%, AZPN -5.3%, LC -4.9%, SAP -4.1%, VIRT -3.6%, FLEX -3.5%, CCI -3.3%, PLXS -2.9%, TER -2.8%, CLS -2.7%, IBM -1.9%, BOOT -1.8%, NOW -1.6%, LRCX -1.5%, LCII -1.2%, STLD -0.6%, CSX -0.5%, ALK -0.5%

WSJ : LVMH Looks to Renewed China Luxury Spending for Earnings Bump

LVMH Looks to Renewed China Luxury Spending for Earnings Bump
Bernard Arnault’s conglomerate has soared in valuation, but the industry faces headwinds from lower global growth

PARIS— LVMH LVMUY 0.45% Moët Hennessy Louis Vuitton SE is scheduled to report fourth-quarter and full-year 2022 results later Thursday, as it rides a surge of demand for luxury goods that China’s recently loosened Covid-19 restrictions could extend into this year.

Postpandemic demand for LVMH’s dozens of brands, including fine wine, jewelry and fashion labels and upscale hotels, has cemented the group’s position as the most valuable listed company in Europe. It has also helped its chief executive and controlling shareholder, Bernard Arnault, overtake Elon Musk as the world’s richest person.

LVMH’s stock price has recently taken off anew, as China, one of the luxury industry’s biggest markets, drops many of its pandemic-era restrictions. For more than two years, those restrictions have kept Chinese tourists far from Paris, London and Milan, where they once snapped up shoes, purses and jewelry.

Thursday’s results will also come shortly after the company said it would embark on one of its biggest management shake-ups in years. It involved a number of the company’s top managers as well as Mr. Arnault’s daughter, Delphine Arnault, and some of its biggest brands.

Many of the world’s best-known luxury brands have been able to raise prices steadily through the pandemic. Shoppers, many of whom had saved up money as they stayed indoors during lockdowns and other restrictions, have let loose. High-end shoppers have also proven more resilient to the steep inflation that Covid-19 restrictions gave way to. Luxury-goods supply chains, often highly local, weren’t disrupted as much by the pandemic and later the war in Ukraine.

That has all helped LVMH emerge from the pandemic as Europe’s largest company by market value, outstripping the continent’s industrial stalwarts, such as Shell PLC, Airbus SE and Volkswagen AG, which have all struggled with a series of shocks to their businesses.

Questions remain, however, about how long this postpandemic boom for luxury goods will last, as economic prospects in the U.S. and Europe remain uncertain. In a recent report, consulting firm Bain & Co. forecast that sales of personal luxury goods would rise between 3% and 8% in 2023, a sharp slowdown from last year’s estimated 22% growth.

A poll of analysts’ estimates compiled by FactSet estimates the French luxury-goods conglomerate will book quarterly sales of 22.44 billion euros, equivalent to about $24.5 billion, in last year’s final quarter, up from €20.04 billion during the same quarter the prior year. Net profit is expected to come in at €14.61 billion for the full year, up 21% from the previous year.

British fashion house Burberry Group PLC and Cartier owner Cie. Financière Richemont SA said last week that sales to Chinese shoppers were starting to pick up after fourth-quarter lockdowns dragged them down. That could be an early sign of recovery in what was the luxury industry’s biggest market before the pandemic.

“The market is likely to look past any Covid-19 setback in China in [the fourth quarter] to focus on the country’s reopening tailwind for the sector this year,” Stifel analyst Rogerio Fujimori wrote in a research note this week. January sales growth will have turned positive for LVMH in China, also helped by the earlier start to the weeklong Lunar New Year holiday, Mr. Fujimori added.

Amid China’s Covid-19 hibernation, the U.S. emerged as the luxury industry’s biggest market. Americans accounted for between 32% and 34% of global luxury spending last year, a sharp increase from the 22% they represented in 2019, prepandemic, according to the Bain report.


While LVMH doesn’t typically break out the financial performance of its individual brands, investors will be looking for clues about the performance of the likes of Louis Vuitton and Dior, which together account for around 70% of the company’s core profit, according to the estimates of analysts at UBS.

Pietro Beccari, who currently runs Dior, will take the helm of Louis Vuitton next month. At Dior, Mr. Beccari opened a new flagship store that extends over five levels in Paris’s luxury shopping district. He has also pushed an array of high-visibility marketing projects around the globe.

Mr. Arnault tapped his daughter Delphine to succeed Mr. Beccari at Dior. The change marks a homecoming of sorts for Ms. Arnault, who worked for 12 years at Dior before joining Louis Vuitton, where she was in charge of all product-related activities. She was recently responsible for a collaboration between the brand and reclusive Japanese artist Yayoi Kusama for a new collection.

Dior’s revenue has more than tripled over the past five years, analysts say. How Ms. Arnault handles her first job as a brand CEO could have bearing on whether she is seen as a possible successor to her father.

(ZH) Germany Still Years Away From Replacing Russian NatGas, Official Admits To

Germany Still Years Away From Replacing Russian NatGas, Official Admits To "Unspoken Strategy To Pay Crazy Prices"

Some European politicians and economists are breathing a sigh of relief after mild temperatures, increasing liquefied natural gas shipments, and above-average natural gas stockpiles have so far averted a worsening energy crisis this winter. Other politicians believe the energy crunch won't be over for many years.
"Gas storage is up and gas prices are down. Inflation is falling and uncertainty is declining," Deutsche Bank AG wrote in a note this week, adding, "We can afford to be more optimistic."
As of late, Europe's biggest economy, Germany, has seen an improvement in business outlook as recession fears recede, according to data from the Ifo Institute, a Munich-based economic researcher.
Ifo President Clemens Fuest told Bloomberg TV:
"The most important risk for the German economy was a gas-rationing scenario ... and that risk is off the table now."
There's a lot to be happy about in Europe: Dutch front-month NatGas, the continent's benchmark, slid as much as 5% to 55 euros a megawatt-hour today, the lowest level since late 2021. Prices have collapsed by more than 83% since peaking at 311 euros a megawatt-hour last August.
However, the optimism could be short-lived because Germany is years from entirely substituting Russian NatGas flows with LNG shipments.
Last week, Chancellor Olaf Scholz told Bloomberg that German learned a hard lesson in its addiction for cheap Russian NatGas. He said the country is now rejiggering supply chains that will increase capacity for LNG imports at major ports.
A new report via the country's Economy Ministry shows Germany will install 56 billion cubic meters of domestic LNG import capacity by 2026. By 2030, capacities will increase to 76.5 billion cubic meters or about 80% of total German NatGas consumption in 2021.
The ministry pointed out that even though current NatGas storage facilities are above normal levels, there are mounting risks later this year that storage could sink to dangerously low levels and result in shortages.
"The truth is, there won't be enough in the next three to four years of LNG production capacity in the world to meet the growing demand. So the unspoken strategy is that Germany will continue to pay crazy prices and other, less rich countries go empty-handed," Christian Leye, a Bundestag Left Party representative, told Bloomberg.
Germany has reduced its dependence on Russian NatGas by importing LNG from other EU countries and increasing NatGas pipeline flows from Norway and the Netherlands. Germany didn't have a choice after explosions rocked Nord Stream last year. An issue we see is that Germany's NatGas storage was filled last summer when Russian NatGas was still flowing -- not so much anymore.
Deutsche Bank expects EU NatGas prices to fluctuate between 50 and 100 euros a megawatt-hour this year. It's only a matter of time before the temporary relief evaporates and the energy crisis resurfaces.

>>> Europe : Brokers Upgrades & Downgrades - 26th of January 2023 V2(+)

>>> Up
* BAE Raised to Buy at SocGen
* Lonza Raised to Overweight at KeyBanc; PT 650 Swiss francs
* Sword Raised to Outperform at Oddo BHF; PT 50 euros
* Thales Raised to Buy at SocGen; PT 141 euros

>>> Down
* Arjo Cut to Sell at Pareto Securities; PT 35 kronor
* Axfood Cut to Hold at Nordea
* Boohoo Cut to Underperform at RBC; PT 35 pence
* Grolleau Cut to Hold at Stifel; PT 7.30 euros
* Lonza PT Cut to 500 Swiss francs at Intron Health
* Netcompany PT Cut to 260 kroner from 325 kroner at Citi
* Nibe Cut to Sell at Pareto Securities; PT 105 kronor
* Novartis Cut to Neutral at Citi After Revamp, Drug Headwinds
* Otovo Cut to Neutral at SpareBank; PT 19 kroner (+)
* Prodways Cut to Neutral at Oddo BHF; PT 3.40 euros

>>> Initiation
* Advanced Medical New Buy at Berenberg on Strong Growth Outlook
* Alstom Reinstated Outperform at Oddo BHF; PT 31.80 euros

>>> Call
* Daetwyler Falls as Berenberg Sees Short-Term Headwinds Ahead
* Lloyd’s Insurers Entering ‘Golden Era,’ Hiscox Raised: JPMorgan
* Fevertree Earnings Guidance ‘Materially’ Below Views, MS Says (+)
* Mitie Revenue Beats, Outlook Tone ‘Upbeat,’ Jefferies Says (+)
* Netcompany Cut at MS, PT to Street-Low at Citi on Margins
* Ocado, Boohoo Both Cut at RBC on Cautious Internet Stocks View
* Saipem Top Oil Services Pick at JPMorgan, Subsea 7 Downgraded
* Soitec 3Q Sales In-line With Inventories a Concern: Berenberg
* Vonovia, LEG, TAG Property Headaches Might Have Only Just Begun

>>> Stoxx 600 Pre-Market Indications

  • Nokia (NOA3 TH) +5.6%
    • Nokia Beats Fourth-Quarter Estimates Amid ‘Robust’ Demand
  • STMicroelectronics (SGM TH) +5%
    • *STMICROELECTRONICS SEES 1Q NET REV. $4.20B, EST. $3.81B
  • Sartorius (SRT3 TH) +2.8%
    • Sartorius FY Adjusted Ebitda Meets Estimates
  • Leonardo (FMNB TH) +2.5%
  • Evotec SE (EVT TH) +2.3%
    • Evotec to Help Janssen Develop Immune-Based Cancer Therapies
  • Prosus (1TY TH) +2.2%
  • Imperial Brands (ITB TH) +1.7%
  • Repsol (REP TH) +1.7%
    • Oil, Gas Prices Set to Stay Elevated Despite Macroeconomic Drags
  • Sabadell (BDSB TH) +1.3%
    • Sabadell 4Q Net Income Beats Estimates
  • SAP (SAP TH) -0.8%
    • SAP Plans to Sell Qualtrics Stake, Cut Jobs in Profit Push

>>> TradeGate Pre-Market Indications

DAX:
  • Sartorius (SRT3 TH) +2.8%
    • Sartorius FY Adjusted Ebitda Meets Estimates
  • Infineon (IFX TH) +1.6%
    • STMicro’s 2023 Outlook Beats Estimates on Strong Auto Demand
  • Deutsche Post (DPW TH) +1%
    • Deutsche Post Workers to Strike Again Thursday, Union Says
  • Zalando (ZAL TH) +0.9%
    • Ocado, Boohoo Both Cut at RBC on Cautious Internet Stocks View
  • SAP (SAP TH) -0.3%
    • SAP Plans to Sell Qualtrics Stake, Cut Jobs in Profit Push
MDAX:
  • Evotec SE (EVT TH) +3%
    • Evotec to Help Janssen Develop Immune-Based Cancer Therapies
  • Rheinmetall (RHM TH) +1.5%
  • Aixtron (AIXA TH) +1.4%
  • HelloFresh (HFG TH) +1.1%
  • TeamViewer (TMV TH) -0.4%
    • Ocado, Boohoo Both Cut at RBC on Cautious Internet Stocks View
SDAX:
  • DIC Asset (DIC TH) +5.3%
    • DIC Asset Prelim 2022 FFO ~EU114.2M, Sees 2023 FFO EU90M-EU97M
  • Eckert & Ziegler (EUZ TH) +2.2%
  • Hensoldt (HAG TH) +1.3%
  • SFC Energy (F3C TH) +1.2%
  • Nordex (NDX1 TH) +1%
  • PNE AG (PNE3 TH) -1%
  • Schaeffler (SHA TH) -1.1%
    • Auto Suppliers Face Uncertainties, Schaeffler Cut at Berenberg
  • ADVA Optical (ADV TH) -1.2%

FT : British car production falls to lowest level since 1950s

British car production falls to lowest level since 1950s
Factory closures and supply chain shortages blamed for 10% drop in vehicle output

British car manufacturing fell to the lowest level in more than half a century during 2022, after a year tainted by supply chain disruption and a spate of factory closures.

The number of cars produced fell 9.8 per cent to 775,014, the worst year since 1956, according to figures released by the Society of Motor Manufacturers and Traders on Thursday.

While the worldwide industry is still hamstrung by a global semiconductor shortage and sporadic parts supplies from China, several UK plant closures during the past two years depressed the numbers further.

Honda’s Swindon facility, which produced about 100,000 models a year, closed in 2021 while the Stellantis site at Ellesmere Port ceased making the Vauxhall Astra last year, in order to prepare to make a new electric van, which will start this year.

Several plants were hit by supply chain problems during the year, with BMW’s Mini plant affected by supply of wiring harnesses made in Ukraine following Russia’s invasion. Several plants were also hit by parts shortages from China, where factories had to stop suddenly owing to Covid-19 shutdowns.

In addition, sales to Russia — which was in the top 10 export markets during 2021 — ceased earlier in the year following the invasion of Ukraine.

As carmakers have struggled to secure enough chips to make their vehicles, they have prioritised the most profitable models. While this helped some UK factories such as VW’s Bentley and BMW’s Rolls-Royce, it may have hurt Toyota, which makes its larger models overseas.

Production is expected to pick up again this year, as the global chip shortage eases, and as the Ellesmere Port plant comes back online.

But even with car output predicted to increase by 15 per cent, the overall volume will still be 40 per cent lower than before the pandemic, the SMMT said.

“We enter this year with a degree of optimism,” said Mike Hawes, SMMT chief executive. “2020 was bad, 21 was worse and 22 was even worse. The only way is up from here.”

UK van production, predominantly based at the Stellantis-owned Luton plant, was a bright spot last year, with a 40 per cent increase owing to strong global demand.

Electric and hybrid vehicles were another highlight and now account for one-third of overall production. Led by the electric Mini, the Nissan Leaf and the hybrid Toyota Corolla, the numbers of these low-emission models rose by 40 per cent to 234,000.

The SMMT forecasts that UK plants will not reach 1mn vehicles a year until at least 2025, based on independent projections.

The figure, which is still ambitious given last year’s numbers, is half the long term target of 2mn vehicles that the industry harboured back in 2015, when carmaking was at record levels.

The year also saw Nissan overtake Jaguar Land Rover to become the UK’s largest car producer, helped by both its electric Leaf car and a sharp slide in JLR’s own production.

FT : Aircraft shortage drives demand for groups that repair older planes

Aircraft shortage drives demand for groups that repair older planes
Carriers forced to fly ageing jets boost aerospace suppliers such as AAR and Heico

Aerospace suppliers that maintain planes and furnish spare parts are enjoying a boom thanks to a revival in air travel and slow deliveries of new aircraft.

Strong demand for their services is evident in the Rockford, Illinois, hangars of AAR, one of the leading companies in the sector with a market value of $1.7bn. Technicians there are busy working on the planes of customers such as United Airlines and Southwest Airlines.

“We’re basically full in our hangars,” chief executive John Holmes said. “When you have people, and you have airplanes, that’s a good combination,” he later added.

Two main forces are bringing planes to AAR’s facilities, and Holmes said they are likely to persist for years.

Passenger traffic recovered dramatically last year after collapsing in the first years of the coronavirus pandemic. While global air travel is still down about 20 per cent less from 2019, in the US it has largely returned to pre-pandemic levels.

Nearly 76mn people flew in the US in October, just 3 per cent lower than the same month in 2019, according to the latest available government data. China’s reopening after strict Covid-19 lockdowns is expected to return many more flyers to the skies.

At the same time, top manufacturers Boeing and Airbus have struggled to fulfil all of airlines’ new plane orders. The result is that carriers must stick with older jets for longer and pay more for replacement parts and service.

Repair shops reported a 19 per cent increase in sales in the fourth quarter of 2022 compared with a year earlier, according to research from analyst Ken Herbert at RBC Capital Markets, while revenue for parts sellers grew by 15 per cent.

“Airlines are scrambling to keep up, which means they have to spend more on the airplanes [in their fleets],” Herbert said. “That’s been a big tailwind.” 

United spent $2.2bn on parts and repairs in 2022, a 20 per cent rise compared with 2019 and a 64 per cent increase from 2021. The airline said it flew more, scheduled more engine overhauls and heavy maintenance and absorbed price increases. Delta Air Lines also reported a 13 per cent increase in parts and repair costs over 2019.

Grounding jetliners early in the pandemic had another effect. Airlines, strapped for cash, deferred maintenance. They avoided expensive engine overhauls by swapping out their oldest engines for so-called “green-time” engines that have racked up fewer flying hours.

With manufacturers’ supply of new planes bottlenecked and a dwindling pool of green-time engines, airlines “have to continue flying older, out-of-warranty aircraft that consume parts and need repairs”, said Melius Research analyst Robert Spingarn. “Commercial after-market companies [businesses that sell spare parts and accessories] are benefiting.” 

Among them is Heico, a Florida-based company with a market capitalisation of almost $20bn that produces replacement parts for aircraft. Its sales of $610mn and operating income of $147mn both hit records in the quarter ended October 31, topping levels from before the pandemic in 2019.

Heico competes against businesses such as General Electric’s aerospace division, which makes spare parts for the jet engines it manufactures.

GE reported on Tuesday that it sold $32mn worth of spare parts per day in the fourth quarter, a 34 per cent increase from the same period in 2021. Boeing on Wednesday reported that its services business, which includes selling spare parts, earned $634mn in the fourth quarter of 2022, a 58 per cent increase from a year earlier.

Heico’s products are the same as the ones made by the original equipment manufacturers, but less expensive, akin to generic pharmaceuticals.

Airlines have historically resisted alternative spare parts, but Heico co-president Victor Mendelson said their stance is changing as they confront the challenge of servicing planes with fewer parts available from original equipment manufacturers.

“We already sell to just about every airline that could buy from us, but we have been selling more,” he said. “The resistance drops . . . because, one, they need the parts, and two, they like the value proposition.”

Holmes of AAR also reported increased demand for the used spare parts it sells to airlines and engine overhaul companies. But because fewer airlines are retiring older aircraft, the source of used parts, AAR has had to scour the market to find them. A total of 366 aircraft were retired in the 12 months to December, a 15 per cent decline from a year earlier.

AAR, headquartered near Chicago’s O’Hare International Airport, reported sales of $470mn in the quarter ended November 30, down by 16 per cent from the same quarter of 2019. The company’s net income of $23mn was 58 per cent higher than the same period in 2019.

While AAR’s sales volumes have not recaptured levels from prior to the pandemic, Holmes said, “we feel like we’re well on our way”.

FT : Morgan Stanley hits bankers with $1mn penalties for messaging breaches

Morgan Stanley hits bankers with $1mn penalties for messaging breaches
Forfeitures after WhatsApp scandal range from a few thousand dollars to more than $1mn per employee

Morgan Stanley has hit bankers with financial penalties running up to more than $1mn per employee for conducting official business on WhatsApp and other messaging platforms.

The forfeitures come as the bank tries to punish employees for a scandal that tarnished the group’s reputation and resulted in it paying $200mn of regulatory fines last year.

Ranging from a few thousand dollars to more than $1mn per individual, the penalties are based on a points system that takes into account factors including the number of messages sent, the banker’s seniority, and whether they received prior warnings, said people briefed on the matter.

Depending on the size of the penalty, the funds have either been clawed back from previous bonuses or will be docked from future pay.

Morgan Stanley declined to comment.

The employee penalties are the latest fallout from a wide-ranging crackdown on Wall Street by US regulators over the use of personal phones and unapproved apps. The multiple investigations have resulted in more than $1bn in fines across the banking industry.

US regulators have said banks’ failures to ensure that employees’ electronic communications were stored properly have impeded their investigations.

Morgan Stanley in 2020 fired at least two senior employees at its commodity division — Nancy King and Jay Rubenstein — over their use of personal messaging apps, the FT reported at the time.

Other traders in Morgan Stanley’s commodities team were also given warnings about their use of messaging apps, said one person familiar with the matter. Other banks such as Credit Suisse and HSBC have fired bankers embroiled in the scandal too.

Morgan Stanley has been among the banks hit hardest by the investigation, with the company last year agreeing to pay $200mn to the Securities and Exchange Commission and Commodity Futures Trading Commission.

Morgan Stanley now gives employees training sessions explaining scenarios when they should shift conversations on personal devices to official channels such as their work email. This can include seemingly innocuous instances where colleagues are exchanging messages about the time or location of a meeting.

The group has warned employees that these apparently trivial messages often lead to more material discussions, said a person briefed on the bank’s training programmes.

Many banks now require employees to take a picture of work-related messages on personal devices and forward them to the compliance departments so that they can be preserved.