Bear Stearns Cos. eliminating 650 jobs

4th round of cuts in subprime losses

November 29, 2007|By Bloomberg News

Bear Stearns Cos., the biggest underwriter of U.S. mortgage bonds, will eliminate 650 jobs in the firm's fourth round of cuts this year amid mounting losses on subprime home loans.

"We're going to rationalize our business, monitor staffing needs and align our infrastructure with current market conditions," said Russell Sherman, a spokesman for the New York firm. "We continue to hire strategically."

Bear Stearns, led by Chief Executive Officer James Cayne, had announced about 900 job cuts since August, when the credit crunch hit. After the reductions, the firm will have winnowed out 10 percent of its employees.

Eroding demand for securities backed by home loans to borrowers with heavy debts ate into earnings in the third quarter, when the firm posted its biggest decline in more than a decade. The company said this month that asset write-downs will lead to a fourth-quarter loss.

"Hopefully it's the last at Bear, but if they still have negative things to report in the first quarter, it could continue," said Jason Kennedy, chief executive officer of London-based recruitment firm Kennedy Associates.

Bear Stearns shares rose $4.07, or 4.3 percent, to $99.50 yesterday. The shares have lost about 39 percent this year.

Wall Street firms have cut about 10,000 jobs this year, mostly in units that make home loans and package them into securities. Lehman Brothers Holdings Inc., the No. 2 U.S. mortgage bond underwriter, dismissed 2,450 people in its home loan business. UBS AG, Europe's biggest bank by assets, said last month that it would cut 1,500 jobs because of losses in the U.S. subprime market.

Almost all of the 650 positions Bear Stearns is eliminating are in the U.S., and the majority are in its fixed-income unit.

The world's biggest banks have written down more than $50 billion on credit-related losses this year.

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