Merrill may write down billions more: analysts

Merrill may write down billions more: analysts

Exposure to collaterized debt and bond insurers may weigh on first quarter

By Alistair Barr, MarketWatch

Last update: 2:30 p.m. EDT March 27, 2008

SAN FRANCISCO (MarketWatch) -- Merrill Lynch & Co. may record $4.5 billion to $6 billion in write-downs from exposure to mortgage-related securities and troubled bond insurers during the first quarter, analysts said Thursday.

Bernstein Research analyst Brad Hintz expects the brokerage firm to take a $4.5 billion write-down, but noted that there's downside risk to this estimate. He forecast first-quarter earnings of $1.30 a share, down from a previous forecast of $1.60 a share.

Meredith Whitney, an analyst at Oppenheimer & Co., reckons that Merrill will announce $6 billion in write-downs. Her previous estimate was $2 billion. She is now predicting a first-quarter loss of $3 a share vs. a prior estimate of a 45 cents a share profit.

The firm (MER) was one of the largest underwriters of complex mortgage-related securities known as collateralized debt obligations, or CDOs, and built up considerable exposure to these vehicles.

"The critical component in determining the size of the total write-down Merrill takes this quarter will be where the firm values its CDO positions," she wrote in a note.

Merrill also hedged some of its mortgage exposures by buying guarantees from bond insurers. However, some of these guarantees have dropped in value as some bond insurers lost their AAA ratings on concern about their own mortgage losses.

"The firm will likely need to take further valuation reserves for its financial-guarantor counterparty exposures," Hintz said.

Excluding investment banking and troubled areas of fixed income -- such as mortgage-backed securities, CDOs and leveraged lending -- Merrill's other businesses have been solid in the face of the credit crunch, according to the analyst.

"Government and sovereign-trading books, investment-grade corporate debt trading and the Merrill foreign-currency desks are expected to perform very well. Merrill's equity sales and trading business should report strong results as market volatility and trading volumes were strong this quarter," she wrote.

Shares of Merrill traded down nearly 6% at $41.80 in afternoon action.

Deutsche Bank warns over profits

Deutsche Bank warns over profits

Deutsche Bank has warned that continuing global credit turmoil and possible further bad debt write downs may see it miss its 2008 profit target.

The lender said that if "exceptionally difficult" trading conditions continue, it may fail to meet its aim of 8.4bn euros ($13bn; £6.5bn) in net profits.

The trading update by Germany's biggest bank sent its shares down 1.6% in early Wednesday trading in Frankfurt.

Last month, it reported a 48% fall in profit for the last quarter of 2007.

It gave no new figures for its projected 2008 profits.

'Adversely impact'

Deutsche Bank said its corporate and investment banking units were being most directly affected by the continuing financial market turbulence.

"Compensating for these negative effects on our profitability through performance in our other businesses may not be feasible, particularly if assumptions for continuing, albeit slower, economic growth in 2008 are not correct and less favourable economic conditions prevail," it said.

"These circumstances would likely adversely affect our ability to achieve our pre-tax profitability objective."

In October of last year, Deutsche Bank revealed a 2.2bn euro exposure to US sub-prime debt.

Bank of America may face $6.5 bln loan loss: analyst

Sun Mar 23, 2008 4:06pm EDT

By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp (BAC.N: Quote, Profile, Research), the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst.

Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit.

He said actual losses in the portfolios should be "somewhat less" than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.

"I do not foresee the economy plunging to a level that will substantiate this reserve build," wrote Bove, who has a "buy" rating on the bank, in a report dated March 24. "It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent."

Bove cut his profit per share forecast to $2.98 from $3.81 for 2008, to $3.96 from $4.30 for 2009, and to $4.78 from $4.93 for 2010. He sees first-quarter profit of 37 cents per share.

Bank of America was not immediately available for comment.

In January, Chief Executive Kenneth Lewis said he expected full-year profit would top $4 per share. He predicted credit costs would rise by more than 20 percent, largely in consumer portfolios, but that such an increase would be manageable.

The Charlotte, North Carolina-based bank set aside $3.31 billion for credit losses in the fourth quarter, and $8.39 billion for all of 2007, up 67 percent from a year earlier.

Bank of America agreed in January to buy Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, in a transaction now valued at about $4.4 billion.

The all-stock transaction values Countrywide at $7.63 per share, which is 32 percent above Countrywide's Thursday closing price of $5.78. The gap reflects some investors' expectations that Bank of America might at least try to renegotiate the merger terms because the housing market has weakened.

Bank of America shares closed Thursday at $41.86 on the New York Stock Exchange. They rose 17 percent last week, a strong week for bank stocks, and are up a little more than 1 percent this year.

(Editing by Richard Chang)

Anger boils over as Bear Stearns execs meet their new boss

Anger boils over as Bear Stearns execs meet their new boss

Many of Bear's 14,000 employees will lose their jobs

(NEW YORK) James Dimon tramped through the rain on Wednesday evening and strode into the headquarters of Bear Stearns, the embattled investment bank he hopes to buy for a mere US$2 a share.

More than 400 Bear executives - seething, fearful and to their dismay, far poorer than they were a week ago - were waiting for him.

Only days after his controversial deal for the beleaguered investment bank stunned Wall Street, Mr Dimon, the chairman and chief executive of JPMorgan Chase, made an appearance at Bear Stearns, hoping to win over executives who have vowed to fight his offer. Mr Dimon left many of them as angry and resentful as he found them.

'I don't think Bear did anything to deserve this,' Mr Dimon said. 'I feel terrible sometimes when people think we took advantage. I don't think we could possibly know what you all are feeling, but I hope that you give JPMorgan a chance.'

Over the next 45 minutes, Mr Dimon made it clear that he hoped to retain the best employees at Bear but also made it plain that many of Bear's 14,000 employees will lose their jobs as a result of the deal, struck at the urging of the Federal Reserve and the Treasury Department. JPMorgan executives plan to cull one Bear employee after another, while keeping the best performers, as they move to integrate the two firms.

A few of the executives whom Mr Dimon faced on Wednesday, all of whom own Bear shares, pledged to fight the deal in hopes of luring a better offer from a rival bank, a prospect that, for now, seems distant. Even so, Joseph Lewis, the largest shareholder of Bear, said in a securities filing on Wednesday that he would take 'whatever action' necessary to protect his stake, including seeking out another suitor.

'In this room are people who have built this firm and lost a lot, our fortunes,' one Bear executive said to Mr Dimon with anger in his voice. 'What will you do to make us whole?' The packed room of senior managing directors applauded.

Mr Dimon responded gingerly. 'You're acting like it's our fault, and it's not. If you stay, we will make you happy.'

But the Bear employee was not satisfied. 'I think it's galling you come into our house and you call this a 'merger',' the Bear executive went on.

This time, Mr Dimon was silent.

But Mr Dimon, ruddy- faced and sharply dressed in a light blue tie and white shirt, told the executives that those of them who stay might receive at least 25 per cent of the value of their recent Bear stock awards in the form of JPMorgan shares. Those who stay until the deal closes will receive a one-time cash payment. Mr Dimon urged them not to blame Bear's management, the government or JPMorgan for their circumstances.

Alan D Schwartz, Bear's chief executive, looking pale, summed it up. 'We here are a collective victim of violence,' he said, his voice cracking. 'It's natural to be angry, and you're not sure who to be angry at. But we have to put it behind us.'

But there was a grudging acceptance of their fate, and a number of Bear executives urged colleagues to accept Mr Dimon's offer.

'I've been here for more than 20 years,' one said. 'This deal cost me big time. But if there wasn't a deal, we'd be toast.'

Since the deal was reached on Sunday night, JPMorgan executives have tried to characterise the situation at Bear as business as usual.

It is, however, anything but. Inside Bear, it is already clear that the new bosses have arrived.

On Wednesday, as Mr Dimon made his way across the street under March skies as dreary as the mood inside Bear, a JPMorgan security guard stood watch at Bear's entrance. JPMorgan executives have appropriated offices for private meetings and begun placing calls from the desks of Bear executives.

JPMorgan bankers are already calling most of shots on Bear's trading floor. Some Bear executives remained in charge of the risks that the traders were taking.

Bear traders are shellshocked. In the past days, there have been several instances when Bear traders and businessmen have lashed out at the JPMorgan executives, creating awkward moments.

On Monday, JPMorgan held conference calls with executives in various areas of Bear Stearns.

Then on Tuesday, Mr Dimon kicked off a call with Bear's brokers at 1 pm, telling them how his grandfather and father were brokers and that he was confident that the merged firm would be a formidable force on Wall Street.

'I have broker's blood in my veins,' one Bear employee recalls Mr Dimon saying, adding that many of the brokers seemed inspired by what they heard. -- NYT

Citigroup plans more securities job cuts

Thu Mar 20, 2008 8:24am EDT

NEW YORK (Reuters) - Citigroup Inc, the largest U.S. bank, plans further job cuts in its securities operations in a bid to cut costs after subprime mortgage and credit problems led to a record quarterly loss.

Any job losses would be on top of 4,200 cuts companywide announced in January by Chief Executive Vikram Pandit, and 17,000 announced last April by predecessor Charles Prince. Citigroup has said it ended 2007 with 375,000 employees.

"Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm," spokesman Adam Castellani said on Thursday. "This year, we will have a larger number of reductions as we continue to strengthen the business and lower our expense base."

The institutional clients group includes investment banking and trading operations, as well as alternative investments, which offers hedge fund and private equity services.

According to the New York Times, citing people close to the situation, Citigroup plans to lay off 2,000 investment bankers and traders before the end of March. Most cuts will be in New York and London, though other markets in Europe and Asia will be affected, the newspaper said. Traders are more at risk given market conditions, the newspaper said.

The bank declined to confirm the report. Published reports have said Citigroup might cut tens of thousands of jobs. Pandit has been reviewing the bank's businesses worldwide to explore ways to boost profitability and efficiency.

In the fourth quarter, New York-based Citigroup suffered a $9.83 billion loss, hurt by $18.1 billion of write-downs largely tied to subprime mortgages and related securities.

Speaking on a January 15 conference call discussing results, Chief Financial Officer Gary Crittenden called the 4,200 job cuts a "first installment" in what would likely be "a continual stream of efforts that we are making to reduce headcounts in nonproductive areas" and invest in stronger businesses.

Citigroup shares closed Wednesday at $20.41 on the New York Stock Exchange. They closed one year ago at $50.64.

(Reporting by Jonathan Stempel, editing by Gerald E. McCormick)

Deutsche Bank was in running to buy Bear, report says

Deutsche Bank was in running to buy Bear, report says

By Steve Goldstein

Last update: 8:02 a.m. EDT March 20, 2008

LONDON (MarketWatch) -- Deutsche Bank (DB) was in the running to buy Bear Stearns (BSC) as late as Saturday, according to a report from the German daily Handelsblatt. J.P. Morgan Chase (JPM) agreed to buy Bear for $2 a share in a controversial deal.

Credit Suisse warns expects no Q1 profit

Thu Mar 20, 2008 2:58am EDT

ZURICH (Reuters) - Credit Suisse (CSGN.VX: Quote, Profile, Research) said it was unlikely to post a profit in the first quarter of 2008 due to big debt writedowns and difficult markets, but the shock writedowns it revealed in February were not as bad as first thought.

The bank said in a statement on Thursday that it was profitable through to the end of February but that market conditions were difficult in March.

"In light of the difficult market conditions in March, at this time, Credit Suisse believes it is unlikely to be profitable in the first quarter," the bank said in a statement.

The bank reduced its previously announced estimate for writedowns related to asset-backed securities by 200 million Swiss francs to 2.86 billion francs.

In February, the bank shocked markets by writing down $2.85 billion in asset-backed investments and suspending some traders after finding pricing errors on its books.

The bank had previously said it expected to post a profit for the first quarter and estimated that the writedowns would wipe $1 billion off its net income, after taking into account tax credits and cancelling some staff bonuses.

Credit Suisse said it would post a writedown of 1.18 billion francs against its 2007 accounts -- which translated into a hit of 789 million francs net of tax -- and of 1.68 billion francs against its first quarter 2008 accounts as a result of the new valuations.

The writedowns are the latest in a string of shocks from global banks, including huge new subprime-related exposures at rival UBS (UBSN.VX: Quote, Profile, Research) and the emergency takeover of U.S. investment bank Bear Stearns (BSC.N: Quote, Profile, Research) by rival J.P. Morgan

(JPM.N: Quote, Profile, Research).

Credit Suisse had previously reported subprime-linked writedowns of 2 billion Swiss francs in 2007.

(Reporting by Thomas Atkins, editing by Will Waterman)

UBS tumbles 14%, steepest in 9 years, on job cut reports

UBS tumbles 14%, steepest in 9 years, on job cut reports

(ZURICH) UBS fell the most in more than nine years in Swiss trading after reports that the bank may cut as many as 8,000 jobs, propose a new capital increase and sell businesses.

UBS fell 4.02 francs, or 14 per cent, to 24.42 francs by 134 pm in Zurich. If the shares close at this price, it would be the biggest drop since Sept 30, 1998.

Credit default swaps on UBS jumped 25 basis points to 235, according to Deutsche Bank.

UBS, Europe's biggest bank, plans to cut 5 per cent to 10 per cent of jobs across its different units and may also propose a capital increase at its shareholders' meeting in April, according to a report in SonntagsZeitung, which cited unidentified managers present at the company's top executives' meeting in Berlin last week.

UBS on March 14 denied a CNBC report that it may seek to sell its Paine Webber US brokerage unit to raise money.

'If the bank were contemplating a disposal this suggests a new level of desperation for UBS at raising capital,' Peter Thorne, a London-based analyst at Helvea, said in a report.

'Coming at the same time as the collapse of Bear Stearns and concerns about the financial system in general, and banks with suspect balance sheets in particular, we expect continued pressure on the UBS share price.'

Bear Stearns had to sell itself to JPMorgan Chase for US$240 million, about 90 per cent less than its value last week, after clients, alarmed by speculation about a cash shortage, withdrew US$17 billion in two days.

The Paine Webber division 'is not up for sale', UBS spokesman Mark Arena said on Friday. Axel Langer, another spokesman for the bank, said on Sunday that the Berlin meeting occurred and that job cuts may take place, though there are 'no concrete plans' to eliminate positions.

He declined to comment on whether a capital increase was discussed in Berlin or is under discussion.

Tobias Lux, a spokesman for the Swiss Federal Banking Commission, said the regulator is monitoring the liquidity situation at Swiss banks.

'The stable liquidity situation of the two big banks hasn't changed,' he said, referring to UBS and Credit Suisse Group.

UBS raised 13 billion Swiss francs (S$18.2 billion) from investors in Singapore and the Middle East to shore up capital eroded by US$19 billion in writedowns on debt assets and loans last year.

The bank may mark down assets by 15 billion Swiss francs in the first quarter, 'wiping out 2008 profits', analysts at Keefe, Bruyette & Woods Ltd wrote in a note to clients on March 11\. \-- Bloomberg

Citi to cut 185 jobs in home mortgage division: report

Citi to cut 185 jobs in home mortgage division: report

By Sue Chang

Last update: 4:14 p.m. EDT March 17, 2008

SAN FRANCISCO (MarketWatch) -- Citigroup Inc. (C) will lay off 185 employees in its home mortgage division, the Associated Press reported Monday, citing a CitiMortgage spokesman. The layoffs were triggered by difficulties in selling home equity products, according to the news agency. However, the company is not exiting the home equity business but will focus more on supporting existing Citibank, corporate and Smith Barney customers.

JPMorgan Chase has said it is to acquire ailing US bank Bear Stearns for $2 a share.

JPMorgan to acquire Bear Stearns

JPMorgan Chase has said it is to acquire ailing US bank Bear Stearns for $2 a share.

The deal values Wall Street's fifth largest investment bank at about $236m.

The bank has been at the centre of the US mortgage debt crisis. Its shares fell 46% to $30 after emergency funding for it was announced on Friday.

The news comes as the Federal Reserve cut its lending rate to banks to 3.25% from 3.50%, and created a new lending facility for big investment banks.

Under the deal, the Federal Reserve will fund up to $30 billion of Bear Stearns's less liquid assets.

Withdrawn funds

Friday's news of emergency funding for the bank raised fears that one of the biggest names on Wall Street was on the verge of collapse.

JPMorgan Chase was to provide the money to Bear Stearns for 28 days with the Federal Reserve of New York's backing.

Bear Stearns's problems stem from the global credit crunch and the worry is that other lenders may also have major funding problems, analysts said.

Recently, speculation had intensified that the bank was struggling to fund its daily business.

BBC business editor Robert Peston said Bear Stearns was taken to the brink of insolvency last week by a sudden collapse in confidence on the part of its hedge fund clients.

As a result, these clients rushed to withdraw their assets.

'Other banks'

The credit crunch was caused because banks became less willing to lend to each other after they suffered large losses on investments linked to the US housing market, and the sub-prime sector in particular.

MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bn UBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bn Bear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bn Barclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bn JP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197m Source: Company reports

Sub-prime lenders focus on clients with poor or non-existent credit histories, and a record number of borrowers have defaulted on loans.

The subsequent freezing-up of the credit markets created problems for a number of companies which relied on borrowing money to fund their business.

In the UK, Northern Rock ran into trouble when its line of relatively cheap credit dried up.

At the end of last year, Bear Stearns reported that it had made its first ever quarterly loss after buying investments linked to the US mortgage market.

It was one of the first to admit it had problems linked to sub-prime mortgages, after two of its hedge funds had to be bailed out.

Robert Peston said that last week's move by JPMorgan and the Fed of New York was essentially a central bank bailout, and described the crisis as "America's Northern Rock".

With high risk and cheap stock, will Bear be sold?

Fri Mar 14, 2008 7:53pm EDT

By Jessica Hall

PHILADELPHIA (Reuters) - The emergency rescue of Bear Stearns Co Inc (BSC.N: Quote, Profile, Research) on Friday left observers from all quarters wondering who would be the last man standing at the Wall Street bank.

When a Bear Stearns analyst moved to ask a question at a biotechnology investor meeting, Genentech Chief Executive Arthur Levinson quipped, "There's still somebody here from Bear? Let's give him a hand."

"I'm still here," said Bear Stearns analyst Mark Schoenebaum. But pointing to a JPMorgan analyst, he said, "I think I work for Geoff Meacham now."

The rescue by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) and the Federal Reserve Bank after Bear said its cash position had deteriorated sharply put the word takeover on the tip of tongues all over Wall Street, with JPMorgan seen as a leading contender to buy out Bear Stearns.

But while Bear's cheap stock price could attract some suitors keen to buy its mortgage finance and trading assets, its liquidity problems may prevent a deal from being consummated, analysts and bankers said.

Shares of Bear Stearns, the fifth largest U.S. investment bank which has been hard-hit by its heavy exposure to the faltering U.S. mortgage market, fell 45 percent, reducing its market value by $3.2 billion to $3.64 billion.

Bear Stearns Chief Executive Alan Schwartz said the company is working with Lazard Ltd. (LAZ.N: Quote, Profile, Research) to examine its alternatives, but it will focus on protecting customers and "maximizing shareholder value."

He said Bear's first-quarter earnings would meet Wall Street expectations.

CNBC reported that Bear Stearns "is actively being shopped." While JPMorgan is "the most likely suspect," CNBC said it was not the only company to receive a pitch to buy the company.

"Our view is it would not be a surprise to see a merger announced over the weekend," said Andrew Brenner, senior vice president of MF Global in New York.

A person familiar with JPMorgan said the bank, which has previously expressed interest in expanding its prime brokerage business, is interested, at the right price, in buying the Bear division that provides loans and handles trades for hedge funds.

The concern for any buyer would be whether Bear Stearns has fully exposed all of its problems or if there is another debacle in the offing.

"Looking from the outside you have to ask, Are they at the end of their troubles? That's a very difficult question," said Anthony Sabino, professor of law and business at St. John's University, in New York.

Bankers and analysts rattled off a list of potential suitors but suggested them with caution, saying it's unclear why any company would buy Bear Stearns when they could pursue stronger assets at other banks.

"The question someone would ask if they were in a potential M&A position would be, Shouldn't we just go after the people? Bring the people in rather than by the firm," said Michael Holland, chairman of private investment firm Holland & Co.

In addition to JP Morgan, potential buyers include Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) and foreign companies such as HSBC Holdings Plc (HSBA.L: Quote, Profile, Research), Barclays Plc (BARC.L: Quote, Profile, Research) and Royal Bank of Scotland Plc (RBS.L: Quote, Profile, Research), some bankers and analysts said.

"If you think about a company like Bear, they don't have hard assets, just computers, office space and people, and one would imagine that people at Bear are polishing up their resumes," said James Ellman, portfolio manager at Seacliff Capital in San Francisco.

"That's how Wall Street works -- when a firm is in trouble, clients leave and your best employees leave. We've seen this story many times before," Ellman said.

Bear Stearns currently trades at 4.9-times fiscal 2008 earnings estimates, compared with the sector average of 18.5-times earnings.

In addition, foreign banks could face some regulatory problems that would add headaches to the purchase of an already ailing company, analysts said. And U.S. banks could try to buy the bank in pieces instead of as a whole, analysts said.

"As far as who in the U.S. would look to take them over -- there are possibilities but I think every American outfit would say, 'We've got our own headaches'," Sabino said.

Bear Stearns' problems emerged because it has more exposure to the U.S. bond markets than its competitors and has a large mortgage-backed securities business.

It's unclear whether Bear Stearns will be able to survive the "run on the bank" that Schwartz described if customers continue to flee and its businesses deteriorate further.

"JPMorgan might buy it for a dollar. I mean you're going to get a good price. Ultimately you have to ascertain if the assets are worth more than the liabilities," Barish said.

Bears' cheap stock price might entice some suitors to take a risk in buying the firm, some investment bankers said. "Just because someone wasn't interested at $120 might doesn't mean they wouldn't be interested at $34," said one head of investment banking at a U.S. brokerage firm. "Bear Stearns now is under pressure to preserve what assets they have, protect their people, protect their clients.

"They might be forced to sell at a price that would have been unthinkable before."

(Additional reporting by Jui Chakravorty, Megan Davies, Dan Wilchins and Bill Berkrot in New York; Editing by Leslie Adler)

Deutsche Bank hires 6 JPMorgan private wealth bankers

March 11, 2008

Deutsche Bank hires 6 JPMorgan private wealth bankers

HONG KONG - DEUTSCHE Bank Private Wealth Management said it had hired six private wealth bankers from JP Morgan , beefing up its team serving Hong Kong's rich families and entrepreneurs. Banks across the region have sought to build up private banking groups to tap the surge in personal wealth of business leaders and their families profiting from China's booming economy. Deutsche Bank said on Tuesday it hired Ms Margaret Kwong, former head of JP Morgan Bank's Hong Kong Coverage team, to become a managaing director reporting to Mr Kenneth Toong, its North Asia head. Other JP Morgan private bankers in the swap include: Ms Wendy Kong, appointed as managing director and relationship manager; Ms Alice Chow, managing director and investment adviser; Mr Wilfred Ng, director and investment adviser; Mr Wayne Wai, director and relationship manager; and Mr Frederick Fong, vice-president and relationship manager. Deutsche Bank said its private wealth management group recorded 19 per cent growth in invested assets in Asia Pacific last year. -- REUTERS

Lehman cutting 5 pct of work force: source

Mon Mar 10, 2008 1:20pm EDT

By Jonathan Stempel

NEW YORK (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research), the Wall Street investment bank, is laying off 5 percent of its work force, or about 1,430 people, because of difficult market conditions, a person briefed on the matter said on Monday.

The cuts are being made across all divisions and regions, and employees affected are being notified on Monday, the person said.

Lehman employed about 28,600 people as of November 30, 2007, according to the company's most recent annual report.

The bank declined to comment.

Before Monday, Lehman had eliminated close to 4,000 jobs in the last year. Many were in mortgage operations, which have been hurt by the nation's housing slump. Lehman is the largest underwriter of U.S. mortgage bonds, Thomson Financial said.

"There's a structural imbalance in the financial services industry," said Michael Poulos, head of financial services in North America at Oliver Wyman, a consulting unit of Marsh & McLennan Cos (MMC.N: Quote, Profile, Research). "Most businesses are built for more volume and higher margins than exist today, and which are likely to exist for the next 12 months or more."

Lenders worldwide have suffered well over $160 billion of write-downs as tight credit market conditions caused losses tied to mortgages and other risky debt.

Several major U.S. investment and commercial banks, including Bank of America Corp (BAC.N: Quote, Profile, Research), Citigroup Inc (C.N: Quote, Profile, Research), Merrill Lynch & Co (MER.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research), have each announced thousands of job cuts since the middle of 2007.

Lehman has withstood subprime mortgage problems better than many rivals, and boosted profit 5 percent in its 2007 fiscal year. Chief Executive Richard Fuld was awarded about $22 million of compensation in that year, though about one-third came from stock-based awards for work in the prior year.

The company is expected to show a roughly 47 percent decline in first-quarter earnings when it reports results on March 18, according to Reuters Estimates.

Poulos said more job cuts are possible in the industry.

"We are definitely fielding a higher number of inquiries from clients looking for help in making their expense base reflect the market environment," he said.

Lehman's shares fell $1.95, or 4.2 percent, to $44.41 in afternoon trading on the New York Stock Exchange. They have fallen close to one-third this year, after closing 2007 at $65.44.

(Editing by Tim Dobbyn and Maureen Bavdek)

Bear Stearns: 'Absolutely No Truth' In Liquidity Rumors

Bear Stearns: 'Absolutely No Truth' In Liquidity Rumors

By Melissa Korn

Last update: 5:13 p.m. EDT March 10, 2008

Bear Stearns Cos. (BSC) backed its liquidity position, issuing a statement declaring "there is absolutely no truth to the rumors" that circulated earlier Monday. President and Chief Executive Alan Schwartz said in the statement, "Bear Stearns' balance sheet, liquidity and capital remain strong." Shares of Bear Stearns closed down $7.78, or 11%, at $62.30 on more than four times average daily trading volume of 7.31 million shares. Shares were up 42 cents at $62.72 in recent after-hours trading. The company is due to release its first-quarter earnings results on March 20.

Merrill quits subprime lending, cuts 650 jobs

Wed Mar 5, 2008 7:03pm EST

By Jonathan Stempel

NEW YORK (Reuters) - Merrill Lynch & Co (MER.N: Quote, Profile, Research) on Wednesday said it will eliminate 650 jobs as it stops making subprime mortgages through its First Franklin Financial Corp unit.

New York-based Merrill said it is quitting the subprime lending business because of the deteriorating market for home loans, which go to people with poor credit.

It said it will try to sell Home Loan Services, a unit of First Franklin that handles billing and collections. Merrill expects to incur $60 million of charges related to First Franklin, mainly for severance payments and closing offices, with about half the amount in the first quarter.

Merrill bought First Franklin and much of its loan portfolio from Cleveland-based National City Corp (NCC.N: Quote, Profile, Research) for $1.3 billion in December 2006.

First Franklin's demise follows a $9.83 billion fourth-quarter loss at Merrill, the worst quarter in its 94-year history, reflecting about $16 billion of mortgage-related write-downs and adjustments.

Ex-Chief Executive Stanley O'Neal had hoped First Franklin would offer Merrill a stream of home loans it could package and sell as securities. But that plan backfired as U.S. housing prices fell, borrower defaults soared, and investors stopped buying many home loans they no longer considered safe.

O'Neal was ousted as Merrill's chief executive in October, and replaced by John Thain, the former chief of NYSE Euronext

(NYX.N: Quote, Profile, Research) (NYX.PA: Quote, Profile, Research).

Dozens of mortgage lenders have closed or slashed staffing in the last year because of the housing slump.

Three other large Wall Street banks -- Bear Stearns Cos (BSC.N: Quote, Profile, Research), Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research) -- have also announced deep mortgage-related job cuts since last summer.

Bill Halldin, a Merrill spokesman, said most of the job cuts at San Jose, California-based First Franklin will take place this month. About 70 workers will remain, he said. First Franklin employed 2,100 people as recently as last May.

Merrill plans to solicit bids for Pittsburgh-based Home Loan Services in the coming weeks.

It also said mortgage lending in its wealth management unit, including prime mortgages offered through Merrill Lynch Credit Corp, and international mortgage operations will not be affected.

Merrill Lynch shares closed down 47 cents at $49.36 on the New York Stock Exchange. They are down 48 percent from their 52-week high $95 set on May 31.

(Editing by Jeffrey Benkoe, Leslie Gevirtz)

Credit Agricole swings to loss, writes down $5 bln

Credit Agricole swings to loss, writes down $5 bln

French bank dismisses talk of bid for Societe Generale

By Simon Kennedy, MarketWatch

Last update: 4:39 a.m. EST March 5, 2008

LONDON (MarketWatch) -- French bank Credit Agricole swung to a fourth-quarter loss of 857 million euros ($1.3 billion) following a $5 billion write-down and indicated that it's not interested in buying troubled rival Societe Generale.

The fourth-quarter result, reported Wednesday, was worse than the roughly 600-million-euro loss analysts expected and compared with profit of around 1.1 billion euros in the year-earlier period.

Credit Agricole (FR:004507: news, chart, profile) , France's third-largest bank by market capitalization, said it took a write-down of 3.3 billion euros at its Calyon investment banking division. The charge was around 800 million euros more than it had previously disclosed, due to its exposure to bond insurers.

Excluding the write-downs and some one-time gains, the bank earned 1.29 billion euros in the quarter as its French retail-banking and asset-management divisions posted profit.

Credit Agricole has been cited as a possible bidder for Societe Generale (FR:013080: news, chart, profile) after its French rival reported losses of more than $7 billion from unauthorized trading.

However, Chairman Rene Carron on Wednesday effectively dismissed the idea.

"With its sound capital base, the group will make organic growth its priority, and it is not considering any significant new acquisitions," Carron said in a statement.

That decision helped support the bank's shares, which rose 3% in early Paris trading, outperforming solid gains for most European markets.

Credit Agricole plans to raise its dividend by 4.3% to 1.2 euros a share and will offer shareholders the option of receiving payment in cash, or a mix of 80% shares and 20% cash.

The bank added that its biggest shareholder, SAS La Boetie, indicated it was "strongly in favor" of the choice and would take its dividend in shares.

If all holders follow suit and opt for payment in shares, it would be equivalent to the bank raising 1.5 billion euros of new capital, according to analysts at Keefe, Bruyette & Woods.

Following the disposal of its holding in Suez (FR:012052: news, chart, profile) and other capital gains in January, Credit Agricole said it intends to use some of the proceeds to strengthen risk management and control systems within the group.

Investment banking weakness

Breaking the results down by division, problems were concentrated in the bank's Calyon investment banking unit, which reported a loss of 1.91 billion euros. Even excluding the write-downs, the unit's profit fell 25% to 255 million euros due to deteriorating investment banking markets.

In asset management, insurance and private banking, operating profit rose 10% in the fourth quarter to 622 million euros, helped by gains from unwinding its joint venture with Intesa Sanpaolo (IT:ISP: news, chart, profile) .

In its LCL French retail-banking division, fourth-quarter profit rose 6.5% to 170 million euros, helped by rising customer deposits.

Simon Kennedy is the City correspondent for MarketWatch in London.

DeutscheBank equity head moves to HK

DeutscheBank equity head moves to HK

(HONG KONG) Deutsche Bank will move its global head of equity trading to Hong Kong, joining rivals including Citigroup in relocating executives to Asia as the region's capital markets grow and takeovers increase.

New York-based Noreddine Sebti will take over from Colin Fan as Asian head of equities this month, said Michael West, a spokesman for the bank. Mr Sebti will report to Loh Boon-Chye, head of global markets Asia, and maintain his role as worldwide equity trading head, reporting to Yassine Bouhara, the bank's head of equities.

Deutsche Bank, Citigroup and HSBC Holdings are among banks that are expanding in Asia even after the US mortgage market collapse eroded profits or, in Citigroup's case, caused record losses. Powered by China's economic boom, the region has mostly skirted the credit market seizure that led to US$181 billion of writedowns and loan losses at banks and securities firms.

'Global banks are moving qualified personnel to Asia to tap growth potential in the region,' said Manfred Jakob, a Frankfurt-based analyst at SEB AG. 'The stock market is booming, there are more IPOs and Hong Kong is an increasingly important financial hub.'

Mr Sebti has worked in both London and New York since joining Deutsche Bank in 1998. He started his career at Credit Suisse Group in 1989. Mr Fan is moving to London to become co-head of global credit trading.

China is home to the world's third-largest stock market, after the benchmark CSI 300 Index surged almost five-fold in the past three years and as companies raised a record US$67 billion in share sales in 2007, according to data compiled by Bloomberg.

In Hong Hong, shares worth an average HK$87.4 billion traded daily last year, more than double the 2006 average of HK$33.7 billion. That outstripped the 5.6 per cent increase in the average value of securities traded on the US Standard & Poor's 500 Index.

The value of acquisitions involving companies based in the Asia-Pacific region rose to US$784.4 billion last year from US$465.1 billion in 2005, according to Bloomberg data.

Citigroup this month transferred Ted Kuh, global co-head of investment banking for the retail industry, to Hong Kong from London. Morgan Stanley's former chief economist Stephen Roach last year moved to the city from New York to become the firm's Asia chairman.

Deutsche Bank chief executive Josef Ackermann said on Feb 7 that the bank intends to become 'the leading international financial services provider in key Asian countries'.

'They've taken a view on what's coming forward in the next two to three years,' said Martin Marnick, head of equity trading at Helmsman Global Trading in Hong Kong. 'I believe investment banks are going to profit more from Asia than in Europe and the US, so it makes sense to have their major executives where profit is going to be extracted\. \-- Bloomberg

Barclays to acquire Russia's Expobank for $745 million

Barclays to acquire Russia's Expobank for $745 million

By Simon Kennedy

Last update: 2:21 a.m. EST March 3, 2008

LONDON (MarketWatch) -- Barclays (UK:BARC) (BCS) said Monday that it's agreed to buy Russian bank Expobank from Petropavlovsk Finance for $745 million. Barclays said it will finance the deal through its existing cash resources and added it expects the transaction, which is due to close in the summer, to enhance earnings by 2011. Expobank has 32 branches dealing with a range of corporate and wholesale clients principally in Western Russia. Barclays said the deal is part of its plan to increase exposure in emerging markets with good growth characteristics.

J.P. Morgan puts $4.9 bln LBO loans onto its balance sheet

J.P. Morgan puts $4.9 bln LBO loans onto its balance sheet
By Greg Morcroft
Last update: 3:59 p.m. EST Feb. 29, 2008
NEW YORK (MarketWatch) -- J.P. Morgan Chase (JPM) said Friday that it is reclassifying $4.9 billion of leveraged loans on its books as investments, rather than as held for sale, as the market for loans made to firms doing corporate buyouts weakens further. "While some leveraged finance loans were sold during the fourth quarter of 2007, the firm held $26.4 billion of leveraged loans and unfunded commitments as held-for-sale as of December 31, 2007. Markdowns in excess of 6% have been taken on the leveraged lending positions as of year-end 2007," J.P. Morgan said in a 10k filing with the SEC. "In January 2008, the firm decided, based on its view of potential relative returns, to retain for investment $4.9 billion of the leveraged lending portfolio that had been previously held-for-sale." The bank, the nation's largest, said it expects further declines in the leveraged loan market in 2008. End of Story