PRESS DIGEST- New York Times business news - March 28
March 28 The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.
NEW YORK For many bankers and traders, the days of company perks such as sleek limos, cushy business class seats, and fat steaks are gone.
Multibillion dollar write-downs have forced trading desk heads and senior bankers to chip away at small comforts to reduce expenses and strengthen the bottom line.
Just ask Ron Karp, a controller at Corporate Transportation Group, which provides rides home to Wall Streeters working late.
"The phone doesn't ring as much as it used to. If you're firing people you're not going to send them around in limos," Karp said. The slowdown has been visible over the past month at car services city-wide, he added.
Cutbacks are happening in individual departments, rather than companywide as seen early this decade after the tech bubble burst.
But affected employees feel the pinch anyway. Credit Suisse has reduced some cell phone subsidies and done away with car vouchers. Merrill Lynch has banned business class travel for some divisions, Goldman Sachs has pulled free soda, and JPMorgan has upped the requirements for free meals and car rides.
Slashing small perks cuts costs, but more importantly it signals that workers should keep expenses down in areas under their control. "Banks cut perks to reinforce to employees that the firm's under pressure," Brad Hintz, an equity analyst at Sanford C. Bernstein, said. "It tells people to use their heads and watch expenses."
A HARSH CLIMATE
Financial institutions have announced more than $300 billion of write-downs, losses and credit provisions since mid-2007.
That has spurred big layoffs, including over 23,000 announced in April, with about half the cuts coming out of Merrill Lynch and Citigroup, according to a report by Challenger, Gray & Christmas, Inc.
"The usual pattern is to accelerate layoffs and cut operating costs as much as they can," said Roy Smith, a professor of entrepreneurship and finance at the Stern School of Business and a former partner at Goldman Sachs. Banks followed this protocol in 1987, 1990-91, 1994, 1998 and 2000-2002, he said.
The question remains whether the cuts will end as the outlook for Wall Street firms improves, with the AMEX Security Broker Dealer Index .XBD rising over 30 percent to 181 since its March 17 lows.
TIGHTENING THE BELT
Managers forced to make a choice prefer to cut comforts rather than personnel so that they are equipped to take advantage of any rebound in the markets.
Hence, at Credit Suisse CSGN.VX, some divisions have placed a strict $30 limit on meals ordered by traders working late, according to a person familiar with the matter. Employees can no longer choose dinner from any restaurant in town. Instead, all catering goes through online service SeamlessWeb, so that managers can better monitor food orders.
Gone are some employees' free personal cell phone bills: the firm now only subsidizes a portion. Car vouchers are history: traders must pay for rides with corporate cards.
Some divisions at Merrill Lynch MER.N, which recently posted its third straight quarterly loss, have pushed employees to the back of the airplane: they've eliminated first class and business class travel for all domestic flights, according to one equity trader familiar with the matter.
Spokespersons for Credit Suisse and Merrill said the changes were not implemented across each company, but by individual teams or divisions.
Even firms relatively unscathed by the credit crunch are slashing expenses. At JPMorgan (JPM.N), which acquired Bear Stearns for a fire sale price in March, one bond trader said some employees must work later to be eligible for a car ride home, while others must stay at work for a specified time after ordering food on the company account.
A JPMorgan spokesperson declined to comment on the issue.
Free soda stopped flowing on certain Goldman Sachs (GS.N) trading floors a few weeks ago, a company spokesperson said.
Cost cuts can go too far though, and companies may end up paying in other ways, said Jeff Visithpanich, a principal at compensation consultant Johnson Associates.
"Maybe it looks good on paper, but what you get is a number of people taking longer breaks to go downstairs to Starbucks."
(Editing by Richard Chang)
March 27 A lawyer defending Platinum Partners founder Mark Nordlicht against fraud charges said on Monday an FBI agent who admitted to leaking to the press on an insider trading probe of sports gambler William "Billy" Walters may also have leaked about Platinum.