JP Morgan Chase announced yesterday that it will cut 9,200 jobs over and above the 1,600 job cut made last week at Washington Mutual, which it acquired in September when WaMu, the US largest bank became one of the first casualties of Wall Street credit crisis.
Last week, JP Morgan Chase had already cut 1,600 back-operation jobs in San Francisco and Pleasanton and this new cut will eliminate 4,000 jobs in the next two months while the remaining 5,200 employees will stay on in transition at JP Morgan to help integrate the banks till the end of 2009.
The cut will have an effect on 21 per cent of WaMu total work force of 42,000 and most of the cuts, which is about 80 per cent, will come at the banks headquarters in Seattle where approx 3,400 will be laid off, while the remaining will be from different locations within the US.
The 5,200 transition employees who will stay back till 2009 will receive double their salary as of 1 October until their last day on the job and will be eligible for severance packages.
JP Morgan Chase will keep all the network of WaMu's branches and rename it Chase in 2009 and most employees at its branches will not be affected with this cut as most of the layoffs are at the corporate level.
With the acquisition of WaMu, JPMorgan Chase will now be able to expand its branch network all over the US making it a major player in California, Florida and the West Coast.
Washington Mutual became the largest bank failure in US history when federal regulators seized it and sold its branches, deposits and loans to its rival JPMorgan Chasefor around $1.9 billion through a bidding process. (See: Federal Reserve seizes WaMu; auctions it to JPMorgan for $1.9 billion)
Washington Mutual had losses in billions of dollars due to its heavy exposure to the mortgage market and filed for bankruptcy in late September.
In April, JPMorgan Chase acquired the failing investment bank Bear Stearns, the largest US depository institution with over $900 billion of customer deposits, financial services and the second-largest branch network in the US at a fire-sale price. (See: US Fed clears JP Morgan's acquisition of Bear Stearns bank)