December 2, 2008 / 12:32 AM / 11 years ago

JPMorgan to cut 9,200 Washington Mutual jobs

NEW YORK (Reuters) - JPMorgan Chase & Co said on Monday it will eliminate about 9,200 jobs at the former Washington Mutual Inc, which on September 25 became the largest U.S. bank to fail.

The wind blows the JPMorgan Chase flag outside its building in New York, March 17, 2008. REUTERS/Chip East

The cuts amount to more than 21 percent of the work force at Washington Mutual, which ended June with 43,198 employees.

Washington Mutual had been the largest U.S. savings and loan before JPMorgan bought its banking assets for $1.9 billion in a transaction arranged by U.S. regulators. The holding company for Seattle-based Washington Mutual later filed for bankruptcy protection.

About 4,000 of the jobs will be cut by the end of January, and another 5,200 later, JPMorgan spokesman Christine Holevas said.

The 5,200 workers will receive double their annual salaries retroactive to October 1, payable in a lump sum when their employment ends, Holevas said.

Seattle will bear the brunt of the cuts, with 3,400 layoffs out of a total of 4,300 Washington Mutual employees in the city, JPMorgan said. Another 1,600 layoffs will be in the San Francisco area, and the remaining 4,200 will be elsewhere.

Most branch workers will keep their jobs. The combined company has about 5,400 branches, and JPMorgan has said it plans to close no more than 10 percent.

Holevas said JPMorgan has not decided the fate of Washington Mutual’s headquarters building in Seattle.

Washington Mutual collapsed under the weight of roughly $176 billion of home equity, adjustable-rate and subprime home loans on its books. It is one of 22 U.S. lenders to fail this year.

Bank of America Corp, which is set to acquire Merrill Lynch & Co Inc before the end of the year, is also expected to cut about 10,000 investment banking jobs at the combined banks, CNBC reported on Monday.

Bank of America spokesman Scott Silvestri said in an e-mailed statement, “We are following the same review process to evaluate staffing levels used in every merger transition and we have nothing to announce.”

Bank of America and Merrill shareholders are scheduled to vote on the merger on December 5.

Shares of JPMorgan closed on Monday down $5.54, or 17.5 percent, at $26.12 on the New York Stock Exchange, while shares of Bank of America closed down $3.40, or 20.9 percent, at $12.85. Shares in Merrill closed down $3.09, more than 23 percent, at $10.19.

Bank shares were among the biggest decliners on Monday on expectations the deepening global economic slump will cause credit losses and write-downs to soar.

Editing by Carol Bishopric, Phil Berlowitz

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