Bear Stearns will cut 650 more jobs worldwide
30 November 2007
Bear Stearns said on Wednesday 28 November that it would cut 650 jobs (4 per cent of its global work force) as the investment bank braces to lose money on sub-prime mortgages in the fourth quarter.
Bear shares have plunged 39 per cent this year, amid hard questions about the work ethic of its chairman and chief executive James Cayne — who is reported to excessively indulge his hobbies, bridge and golf — and the company''s excessive dependence on fixed-income trading.
Cayne addressed some of those fears recently, striking an alliance with China''s No 1 brokerage CITIC Securities, which he says will help diversify the bank's revenue base overseas. Bear says it has plenty of cash and does not need a capital injection.
The collapse of the US sub-prime mortgage market has forced Wall Street to slash jobs and write off billions of dollars of assets underpinned by mortgages given to people with shaky credit.
Bear Stearns has already cut about 9 per cent of its workforce from peak employment levels. Since mid-August, Bear Stearns has announced the elimination of about 1,490 jobs. The company employed about 15,500 people at the end of August. The latest cuts affect employees across the company, including back-office jobs in London.
Two Bear Stearns hedge funds collapsed this summer, leading to the ouster of co-president Warren Spector and tarnished the image of a company known for its finesse in bundling home loans into mortgage-backed bonds.
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 in the quarter, compared with a $563 million profit in the year-earlier period. Analysts expect Bear to lose about $200 million or $1.36 a share in the fourth quarter.