Bear Stearns cut 300 jobs yesterday to reduce costs, as the investment bank continued to deal with the summer’s credit turmoil that swept through Wall Street.
The layoffs came the same day that the Swiss bank UBS, which is already writing down the value of some assets by $3.4 billion, warned investors that its fourth-quarter results might be hit by a further downturn in the United States housing and mortgage markets.
The Bear Stearns layoffs will affect various business units, including the firm’s equity trading business, according to an internal memo obtained by The Associated Press. They represent about 2 percent of the staff, which was 15,516 employees as of Aug. 31.
Bear Stearns already cut about 600 positions from its mortgage-origination unit as defaults from borrowers with risky credit began to grow.
A spokesman would not say where positions were cut, confirming only that 300 cuts were made. He said, however, that the layoffs did not mean a hiring freeze, and that the investment bank would continue to add jobs as needed.
“The goal is deploy our resources in today’s challenging environment where growth opportunities are greatest and to reduce costs in areas that can no longer justify their current level of infrastructure,” the chief executive, James E. Cayne, said in the memo. “These difficult decisions were not made lightly. A great deal of care and deliberation went into the assessment of our ongoing business needs.”
The reduction is the latest to hit Wall Street in the last few months, as investment banks reel from deterioration in the subprime mortgage and leveraged loan markets. The biggest global investment houses collectively wrote down tens of billions of dollars worth of assets because of the market crisis this summer.
Positions will be cut globally at the firm, according to a person familiar with the layoffs who was not authorized to speak publicly about the matter.
UBS said that although the fourth quarter had started well, exposure to the United States credit market “could lead to further write-downs.”
UBS said earlier this month that it would take a write-down of 4 billion Swiss francs ($3.4 billion) because of losses linked to the subprime mortgage crisis in the United States, resulting in a third-quarter pretax loss of 600 million to 800 million francs ($515 million to $690 million). It confirmed this estimate yesterday.
Source : NewYorkTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic]
