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