Top Firm Starts Major Layoffs

The New York Post reports that the season of goodwill is certainly over in Bank of America-Merrill Lynch land, as the new enlarged financial concern has started chopping heads in its investment banking and capital markets businesses. Overall, up to 35,000 staff are thought to be facing the axe, many of whom will come from wholesale banking operations.

Australia's Macquarie Group is ditching assets in order to weather the credit crunch, and issued a statement Wednesday pointing to the fact that 'market conditions (in the last quarter) were execptionally challenging for almost all Macquarie's businesses, adversely impacting levels of business activity and profitability'.

And Bloomberg quotes Constellation Capital Management's Peter Vann, who said: 'The massive profits they have had from their business model are not without risk, and that is what they are seeing now. The model isn't dead, but there are flaws'.

Reuters reports that Sandler O'Neill analyst Jeff Harte has said that JPMorgan Chase may post a loss in its fourth-quarter, after writing down an estimated $2.5bn in leveraged loans, mortgages and structured notes. JPMorgan reports on Wednesday, 21st January.

The news agency also reports that Oppenheimer analyst Meredith Whitney has been stating the obvious again (isn't is getting so boring), pointing out that US banks will have to raise additional capital in 2009, and that further downgrades on mortgage-related securities will further impact capital requirements.

The Financial Times reports that Temasek, Singapore's sovereign wealth fund, may be now sitting on $2bn of paper losses due to its investment in Merrill Lynch. The newspaper also reports that, in the last 2 years or so, Deutsche Bank turned down 'dozens' of approaches from clients who sought to borrow money to invest with Bernie Madoff.

Reuters reports that Wells Fargo CEO John Stumpf has confirmed that job cuts necessary as a result of the recent Wachovia acquisition will kick off as the year unfolds. He said: 'I can tell you there will be duplicative jobs and there will be job loss, I know that. How many that will be, (however), I don't know'. The bank also announced that Robert Engel and Jonathan Weiss will head up its investment banking and capital markets businesses.

Finally, Bloomberg reports that Royal Bank of Canada is to hire 40 staff as it sets up an asset management unit in Brazil.

Please use the 'E-Mail' button immediately under the article title to send this item to a friend.