Source: Merrill, JP Morgan May Cut More
Sun Oct 6, 3:06 PM ET
story.news.yahoo.com
By Ellis Mnyandu
NEW YORK (Reuters) - Merrill Lynch and J.P. Morgan Chase & Co , two of the
world's top investment banks, faced with diminished merger and underwriting
work, are preparing to cut thousands more jobs, sources familiar with the
companies said on Sunday.
As Wall Street's losses deepen, the cuts would be
the latest for the global investment banking sector,
which is already estimated to have shed some
60,000 jobs since the start of 2001.
Banking industry sources said J.P. Morgan, the
second largest U.S. banking firm, could cut as many
as 3,000 workers. On Sept. 17, J.P. Morgan warned
that its third-quarter earnings would be well below
their second-quarter level due to weak trading results
and bad loans to telecommunications and cable
firms.
A source told Reuters that J.P. Morgan Chief Executive William Harrison had
asked the management of each of the bank's divisions some weeks ago to
review their business prospects for next year and adjust staff numbers
accordingly.
During a Sept. 17 conference call announcing its earnings warning Harrison
hinted that the bank may have to cut jobs, saying "in hindsight we had too
much concentration in the telecom space and did not anticipate the level of
deterioration this year."
An industry source said the latest round of J.P. Morgan cuts would trim the
company's 20,000 investment banking staff by 10 to 15 percent. The source
said most of the cuts would hit staff in New York and Asia, adding Europe
might be spared.
"Europe might get off lighter than other areas because J.P. Morgan has been
doing well in investment banking in Europe for the first nine months of this
year," the source said.
MERRILL AX
Merrill Lynch, the biggest full-service brokerage in the United States, was also
preparing further job cuts, sources said. Merrill, which currently employs more
than 50,000 staff, has already cut around 15,000 workers in the past year.
"The investment banking industry is still staffed for a much higher level of
activity than there is right now," said Ray Soifer of Soifer Consulting.
"Right now the banks are going through their annual budgeting plans, which
makes more job cuts no surprise," he added.
A J.P. Morgan spokesman in London declined to comment on the situation,
and the bank's New York media office did not immediately return calls.
Besides a challenging investment banking environment, J.P. Morgan has also
been tarred by financings it set up for bankrupt energy trader Enron Corp. , as
well as by losses in Argentina and the stock market downturn.
On Friday, Wall Street tumbled to a sixth straight week of losses as companies
piled on more negative earnings outlooks.
Sources said the bulk of the cuts at Merrill would focus on staff in New York
and London. They could not provide a figure as to how many workers would be
affected, but Britain's Sunday Times newspaper said the bank might cut a
further 1,000 jobs.
Asked to comment on the situation, a Merrill Lynch spokesman in London said
Merrill continued to actively manage its resources, including expenses and
headcount, in line with the business environment.
The impact of further Wall Street job cuts would be a blow in New York, where
officials are still battling to plug the state's finances after last year's Sept. 11
attacks, estimated by economists to have cost the city up to $95 billion. New
York's jobless rate in July stood at 7.7 percent, above the national rate of 5.6
percent.
story.news.yahoo.com < Previous Story
Email Story |
