NEW YORK (Reuters) - Lehman Brothers Holdings Inc <LEH.N>, 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.
By Jonathan Stempel
NEW YORK (Reuters) - Lehman Brothers Holdings Inc <LEH.N>, 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.
!ADVERTISEMENT!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>. "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>, Citigroup Inc <C.N>, Merrill Lynch & Co <MER.N> and Morgan Stanley <MS.N>, 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)
