Bear Stearns to Cut 4% of Workforce to Curb Costs
Bear Stearns is cutting 650 jobs or 4 percent of its global workforce as the investment bank seeks to lower costs after losing bets on risky subprime mortgages.
Of those cuts, around 20 will be in London, both in the front and back office, a source familiar with the situation said on Wednesday. The bank employs about 1,500 in London.
Since mid-August, Bear Stearns has announced the elimination of about 1,490 jobs amid a subprime lending crisis that has forced billions of dollars of write-downs on Wall Street.
The latest cuts at the investment bank affect employees across the company, a Bear Stearns spokesman said. The company employed about 15,500 at the end of the third quarter.
"As we indicated at the end of October, we are continuing to rationalize our business, monitor staffing needs and align our infrastructure with current market conditions," Bear Stearns said in a statement.
Bear Stearns said it will make strategic hires in growth areas as it works to replace revenue lost to the disruption in the U.S. mortgage market.
Earlier this month, Bear Stearns said that in the fourth quarter it would write down $1.2 billion of assets linked to mortgages. The reduction will result in a net loss for the New York-based investment bank and brokerage.
This past summer, Bear's reputation for being a savvy mortgage player took a hit when two of its hedge funds collapsed after subprime-related investments soured. The company is a
leading underwriter of mortgage-backed bonds, but in recent months it has pared its subprime operations.