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JPMorgan cuts 3,000 investment banking jobs

(Agencies)
Updated: 2008-11-21 09:29

NEW YORK -- JPMorgan Chase & Co (JPM.N) is cutting 10 percent of its investment banking staff, about 3,000 jobs, as the economic slowdown starts to bite into its earnings, people familiar with the situation said on Thursday. 

People walk past the JPMorgan Chase and Co building in New York March 17, 2008. [Agencies]

Related readings:  US firms' job cuts exceed 157,000  Wave of job cuts sweeps across corporate America  US angst-ridden economy leads to more job losses  HP surprises Wall Street with 24,600 job cuts

JPMorgan shares slid as much as 18 percent as one analyst said the cuts could reflect greater-than-expected weakness at the bank, long seen as one of the industry's few stalwarts through the credit crisis.

"Because JPMorgan has held up relative to the group, they're more vulnerable to a fall," said Ben Wallace, securities analyst at Grimes & Co in Westborough, Massachusetts, which holds JPMorgan shares.

"Cutting investment banking jobs raises questions about profitability at the firm," he said.

The company will likely cut staff in line with competitors such as Goldman Sachs Group (GS.N), which is cutting 10 percent, the sources said.

On Thursday, JPMorgan let go at least six equity sales officials from its New York desk, according to one person familiar with the matter.

The bank declined comment. Its shares were down 12 percent at $25.01 in afternoon trade on the New York Stock Exchange after falling as low as $23.21 earlier in the session.

Consumer Risk

JPMorgan has not had to take the severe writedowns on risky classes of mortgage-related assets that other banks have reported because it has limited exposure to such securities.

But in recent calls with investors and analysts, Jamie Dimon, the bank's chief executive, has been warning about possible losses from exposure to consumer debt.

At a conference two weeks ago, Dimon said the wider economic downturn could be worse for banks like JPMorgan than the credit crisis.

The bank is beginning to see customers miss payments on some of its $250 billion of prime mortgages and home equity loans. It has announced a plan to renegotiate $70 billion of mortgages over the next two years to help those customers.

The company's investment bank has just under 31,000 employees, up 20 percent from a year earlier, according to a third-quarter regulatory filing.

JPMorgan took on about 6,000 staff from nearly insolvent Bear Stearns Cos in March and has also added about 40,000 staff through its acquisition of failed thrift Washington Mutual Inc (WAMUQ.PK), according to its third-quarter earnings statement.

The bank's total head count was 228,452 at the end of September.