Officials at JP Morgan Chase have launched a major round of layoffs in the firm's vaunted investment banking department, axing dozens of executives in an attempt to downsize the unit amid a massive slowdown in business, CNBC has learned.
People at the firm say at least two hundred executives were laid off over the past two days - a move unrelated to the firm's recent purchase of Bear Stearns.
JP Morgan executives have said they would cut JP Morgan people to make room for Bear Stearns executives they want to keep.
A spokeswoman for JP Morgan confirmed the cuts and said many of the people leaving were junior bankers.
Still, the layoffs are some of the stiffest on Wall Street amid the current profit drought. Most firms have been cutting between 5 percent and 10 percent of their staff; the JP Morgan cuts may run deeper even though the bank hasn't been stung as hard as other firms with losses related to investments in subprime bonds.
There are as many as 1,000 executives in the firm's investment banking department, the spokeswoman said, meaning once the final tally of cuts is known, the total number of job reductions could be closer to 20 percent or possibly more.
As many as half the people in the mergers and acquisition department were told they no longer have jobs, one executive told CNBC.
And JP Morgan CEO Jamie Dimon is looking to cut even deeper into other areas of the firm's workforce to reflect both the soured business conditions as well the addition of employees following the Bear Stearns purchase.
Dimon is one of Wall Street's most prolific cost-cutters; earlier in the year, he told investors he wanted to create a "fortress-like" balance sheet that could withstand the credit crisis and put JP Morgan in a position to take on perennial Wall Street powerhouse Goldman Sachs, Bill Smith, who runs Smith Asset Management in New York, said.