Nov. 20 (Bloomberg) — JPMorgan Chase & Co., the largest U.S. bank, plans to fire about 10 percent of its investment banking staff, or about 3,000 people, as the global economy slides into recession, a person familiar with the bank said.
The reductions are in line with New York-based JPMorgan’s rivals, including Goldman Sachs Group Inc., which said it will eliminate about 10 percent of staff. JPMorgan’s cuts will be global and include various groups within the investment bank, the person said, speaking anonymously because the news isn’t yet public. Some employees at the New York-based firm have been notified.
“There are aggressive cuts going on everywhere,” said Rupert Della-Porta, the London-based chief operating officer of research firm Atlantic Equities. “There are marked differences between business conditions now and the forward views that even the most conservative managers had. JPMorgan has to right-size their business model.”
JPMorgan also plans to freeze base salaries next year for most employees who earn more than $60,000 to $70,000, another person said. Tasha Pelio, a spokeswoman for JPMorgan declined to comment. JPMorgan’s decision to fire employees was reported earlier by the Sunday Telegraph and Reuters.
Banks are bracing for tougher economic times as government data show the recession may be prolonged. The index of leading U.S. economic indicators fell in October for the third time in four months, a report today showed. The index points to the direction of the economy during the next three to six months.
Deutsche Bank AG, Germany’s biggest bank, will cut about 900 jobs in its global markets division, people familiar with the decision said yesterday. Those reductions, mostly in London and New York, will be made in the so-called exotic structured products, credit origination, and proprietary trading teams, said the people, who declined to be identified before a formal announcement.
So far this year, financial firms have eliminated almost 168,000 jobs worldwide and taken $966 billion in writedowns, losses and credit provisions, according to Bloomberg data.
JPMorgan Chief Executive Officer Jamie Dimon said Nov. 12 the U.S. recession “could be worse” than the credit-market crisis as unemployment rises and consumer credit worsens. The number of Americans filing for unemployment benefits neared a 26-year high in the week ended Nov. 15, the Labor Department said today.
Shares of JPMorgan, down 41 percent so far this year, fell $2.75, or 9.7 percent, to $25.72 as of 1:20 p.m. New York time.
To contact the reporter on this story: Elizabeth Hester in New York at firstname.lastname@example.org.
Last Updated: November 20, 2008 13:21 EST
By Elizabeth Hester