logo
Plus   Neg
Share
Email

JP Morgan plans to cut 10% jobs in investment banking: Reports

Shares of JPMorgan Chase & Co. (JPM) fell about 18% on Thursday's trading, reaching the lowest point in five years, following media reports that the New York-based banking giant is planning to cut about 3,000, or 10%, of its investment banking staff, to tackle with the global economy downturn.

The cuts, which would be across all levels and all regions globally, will be completed by the end of 2008. Citing a person familiar with the matter, the reports said that the bank cut at least six equity sales jobs in New York on Thursday.

The cuts could reflect greater-than-expected weakness at the bank, one analyst said, as per reports. Wider economic downturn is reportedly affecting the bank than the credit crisis, as it did not take the severe writedowns on risky classes of mortgage-related assets due to its limited exposure to such securities.

In recent calls with investors and analysts, JPMorgan's Chief Executive Jamie Dimon warned about possible losses from exposure to consumer debt.

As of the end of the third quarter, JPMorgan's investment bank had about 31,000 employees, including around 6,000 added with the acquisition of Bear Stearns Cos. in March. The bank has also added about 40,000 staff through its acquisition of failed thrift Washington Mutual Inc. At the end of September, the bank's total head count was 228,452.

Meanwhile, a report said that JPMorgan is also planning to freeze base salaries next year for most employees who earn more than $60,000 to $70,000.

The anticipated cuts in J.P. Morgan are in line with other investment banking giants such as Goldman Sachs Group Inc.(GS). In late October, media reported that the firm was planning to reduce staff by about 10% impacted by the financial crisis.

Morgan Stanley (MS), the securities firm that converted into a bank holding company in September, said last week that it plans to cut 10% of staff in its institutional securities unit and 9% in its asset management division in order to cope with the slowing economy and waning client demand. The job cuts are in addition to the 4,440 people Morgan Stanley had already fired in 2008. The New York-based company currently employs about 46,383 people worldwide.

Meanwhile, Citigroup Inc. (C) said last Monday that it plans to cut about 52,000 jobs and reduce expenses by 20% from their peak as the economic crisis worsens. The New York-based banking giant said the job cuts are expected to be in near-terms and would enable the company to trim its global workforce to about 300,000, down 20% from its peak of 375,000 at the end of 2007.

Thursday, financial services provider Bank of New York Mellon Corp. (BK) said it would cut 1,800 jobs or about 4% of its 43,000 global workforce.

JPM closed Thursday's regular trading session at $23.38, down $5.09 or 17.88%, on a volume of 160 million shares, against a three-month average volume of 62.7 million shares.

For comments and feedback contact: editorial@rttnews.com

Follow RTT
>