Credit Suisse Cuts 150 Staff in Mortgage-Backed Units

Credit Suisse on Wednesday became the latest bank to cut jobs in reaction to the global credit crunch and analysts said other investment banks were likely to follow suit soon.

The Swiss bank said it is to cut 150 jobs in its mortgage-backed securities business as a result of a sharp fall in activity, a spokesman for the bank said.

"In line with the current environment and outlook we have made targeted reductions primarily in the mortgage-backed securities business," said the spokesman.

The job cuts would be mainly in New York and London.

The layoffs at Credit Suisse follow a trend throughout the investment banking industry which has seen demand for mortgage-backed securitizations dry up following mass defaults on U.S. subprime mortgages, granted mainly to people on lower income with patchy credit histories.

"One would expect more jobs to go. It's natural for anyone in that business to think about what the scale is going to be going forward," said an analyst with a U.S. bank. "With this level of activity staff cuts are inevitable."

Many investment banks have profited in recent years from bundling together subprime mortgages and selling them on to other financial investors.

"In general you have a big slowdown in this kind of business and investment banks are usually very quick to adapt to the new environment," said Andreas Venditti, an analyst at ZKB in Zurich.

Investors are bracing for up to 1.7 billion euros ($2.39 billion) in loan write-downs at Deutsche Bank when it reports third-quarter results next month but the German investment bank has not yet announced any cuts in its workforce.

HSBC Holdings, Europe's biggest bank, said last week it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking $945 million in charges and write-downs.

Lehman Brothers announced earlier this month it would let go 850 employees as its pruned its U.S. and British loan operations and shut down a South Korean mortgage business.

That followed the dismissal by Lehman in August of 1,200 employees when it shut down subprime lender BNC Mortgage.

And Credit Suisse's chief domestic rival UBS cut about 100 jobs when in May it closed a hedge fund venture, Dillon Read Capital Management, after it ran up losses related to investments in subprime.

"This is an industry trend. It is not generating enough business to justify current staff levels," said the Credit Suisse spokesman.

Shares in Credit Suisse were trading almost unchanged from Tuesday's close on Wednesday at 76.65 Swiss francs ($65.34).

Last month Edward Cahill, the head of the collateralized debt obligations division at Barclays Capital, the investment banking division of Barclays, quit in one of the most high-profile departures.

And on Tuesday U.S. subprime lenders Countrywide Financial and IndyMac Bancorp announced steep job cuts.