JPMorgan to eliminate 2,800 WaMu jobs; total rises to 12,000
27 February 2009
JPMorgan Chase & Co. will eliminate 2,800 jobs at Washington Mutual through attrition, bringing to 12,000 the total number of positions lost since the bank purchased the failed thrift in September.
The new job losses follow a decision in December to cut 9,200 jobs nationwide at WaMu, spokesman Thomas Kelly said yesterday. The bank may also cut head count in its investment bank to between 26,000 and 28,000, Steven Black, co-head of the unit, said during an investor presentation. The bank is building all six of its business lines, and none are stalled for capital, CEO Jamie Dimon said at an investor day speech. JPMorgan will earn ''an awful lot of money'' in 2011, Dimon said. (See: JP Morgan Chase cuts 9,200 jobs at Washington Mutual)
JPMorgan paid $1.9 billion for most of WaMu, including branches and deposits, after the thrift was taken over by the Federal Deposit Insurance Corp. New York-based JPMorgan expects to keep most of the WaMu branch employees and will shutter less than 10 per cent of the combined company's retail outlets, it said in December. (See: Federal Reserve seizes WaMu; auctions it to JPMorgan for $1.9 billion)
The bank expects net savings of $2 billion, JPMorgan's presentation shows, with most of the savings being achieved by the end of the year. ''Unfortunately, a lot of the savings come from head count reduction,'' retail bank CEO Charles Scharf said.
WaMu has been a ''very big management challenge for us,'' Scharf said. One of the first moves after the acquisition was to stabilise the franchise, he said. Scharf said JPMorgan was able to increase deposits by about $500 million in the WaMu footprint from September to mid-February while cutting rates paid on deposits.
The bank is seeking to cut costs as the deepening recession fuels unemployment and loan losses. The bank anticipates quarterly losses this year of $1 billion to $1.4 billion just on its home equity loans to more creditworthy borrowers. Those figures exclude loans Chase picked up in its purchase last September of the failed banking operations of WaMu.
The bank expects up to 41 per cent of these borrowers will be defaulters, or owing more on their homes than the homes are worth, at the end of 2010, up from 27 per cent at the end of last year. Chase's huge credit card portfolio is another major source of concern.