Bank staff face bleak prospects

Stunned dealers and traders at Bear Stearns Cos, the ailing US investment bank rescued by rival JPMorgan Chase & Co, turned up for work yesterday to find the value of their stock options in tatters and the future of their jobs up in the air.

The fear of job losses among bankers, traders and other staff comes as Wall Street grapples with a deepening credit crisis and the threat of recession in the United States grips financial institutions.

Bear Stearns, roughly 30 percent-owned by its staff and proud of its above average level of inside ownership, employs 14,000.

JPMorgan is paying just $2 a share for the 85-year-old Bear, valuing the fifth-biggest US investment bank at $236 million - just one-fifteenth of its market value on Friday and way below its record share price of more than $172 last year.

"The valuation is virtually nothing, it is indeed rock bottom. We have tanked - it's very, very sad. Everyone is in mourning," said a Singapore-based Bear Stearns employee.

The bailout punctuates an eight-month slide in Bear Stearn's fortunes as investors lost confidence in the Wall Street bank, the smallest of the major securities houses and one known as an aggressive trader in credit and mortgage markets.

To add insult to injury, Bear Stearns does not offer payouts, known as "golden parachutes", for executives in the event of it being taken over.

One Tokyo financial industry recruiter, who declined to be identified because of the sensitivity of the issue, said he knew first-hand of Bear Stearns employees looking to jump ship.

"We're already seeing people looking at moves from within that organization," he said.

"In these situations people generally feel, or are concerned, as to whether they will have a job at all, and if they have a job, at what level they will retain it."

Although the takeover means JPMorgan adds Bear's prime brokerage and asset management business to its franchise, it is likely to sell other parts of the business and many jobs could go.

Compared with the US and Europe, Bear Stearns' presence in Asia is limited, but there is some duplication with JPMorgan's business in the region, raising fears of lay-offs.

A spokesman for JPMorgan said the bank was committed to long-term growth in the region.

"It's not a bankruptcy, that's the good news, but JPMorgan is going to come out today and tell us what they think of us," the Singapore Bear Stearns employee said.

"It's better to be out here in Asia than to be in New York."

Agencies

(China Daily 03/18/2008 page17)