(Adds details on share move, analyst comment, byline)
By Elinor Comlay
NEW YORK Nov 20 JPMorgan Chase & Co (JPM.N) is
cutting 10 percent of its investment banking staff -- about
3,000 jobs -- as the economic slowdown starts to bite into its
earnings, people familiar with the situation said on Thursday.
JPMorgan shares slid as much as 18 percent as one analyst
said the cuts could reflect greater-than-expected weakness at
the bank, long seen as one of the industry's few stalwarts
through the credit crisis.
"Because JPMorgan has held up relative to the group,
they're more vulnerable to a fall," said Ben Wallace,
securities analyst at Grimes & Co in Westborough,
Massachusetts, which holds JPMorgan shares.
"Cutting investment banking jobs raises questions about
profitability at the firm," he said.
The company will likely cut staff in line with competitors
such as Goldman Sachs Group (GS.N), which is cutting 10
percent, the sources said.
On Thursday, JPMorgan let go at least six equity sales
officials from its New York desk, according to one person
familiar with the matter.
The bank declined comment. Its shares were down 12 percent
at $25.01 in afternoon trade on the New York Stock Exchange
after falling as low as $23.21 earlier in the session.
JPMorgan has not had to take the severe writedowns on risky
classes of mortgage-related assets that other banks have
reported because it has limited exposure to such securities.
But in recent calls with investors and analysts, Jamie
Dimon, the bank's chief executive, has been warning about
possible losses from exposure to consumer debt.
At a conference two weeks ago, Dimon said the wider
economic downturn could be worse for banks like JPMorgan than
the credit crisis.
The bank is beginning to see customers miss payments on
some of its $250 billion of prime mortgages and home equity
loans. It has announced a plan to renegotiate $70 billion of
mortgages over the next two years to help those customers.
The company's investment bank has just under 31,000
employees, up 20 percent from a year earlier, according to a
third-quarter regulatory filing.
JPMorgan took on about 6,000 staff from nearly insolvent
Bear Stearns Cos in March and has also added about 40,000 staff
through its acquisition of failed thrift Washington Mutual Inc
WAMUQ.PK, according to its third-quarter earnings statement.
The bank's total head count was 228,452 at the end of
(Editing by Matthew Lewis and John Wallace)