Bear Stearns to Cut 310 Jobs, Shuffle Mortgage Unit
Bear Stearns said Wednesday it is laying off 310 workers and fusing its two mortgage businesses, after turmoil in the home loan industry contributed to a dramatic slide in the investment bank's profit.
News of the job cuts, first reported by CNBC, came only hours after Credit Suisse Group said problems in the mortgage market will linger as long as 18 monthsas it announced layoffs in its commercial mortgage-backed securities division, mostly in New York.
Bear Stearns said it is integrating its Bear Stearns Residential Mortgage and Encore Credit divisions into a single subsidiary. It follows similar downsizing moves by Lehman Brothers and Morgan Stanley.
Stung by decaying credit quality, investors soured on many types of mortgage debt this summer. Selling home loans and other investments backed by mortgage debt became much more difficult this year, squeezing a key source of profit on Wall Street.
Bear Stearns is the company most heavily exposed to mortgages among the major investment banks. It has now laid off two-fifths of the employees in its mortgage businesses this year, the company said.
Shares of Bear Stearns were down marginally in choppy trading Wednesday. The stock is down more than 20 percent for the year.
Meanwhile, Credit Suisse Group said it will lay off 170 more employees. The reductions in the investment banking unit will be on top of the 150 layoffs announced last week in New York and London, said spokesman Marc Dosch. Dosch said the cuts were in line with the reduction in client demand.