plans on slashing 850 jobs in its mortgage origination business and shuttering its Korean mortgage operation.
The move, announced early Thursday afternoon, follows an earlier announcement two weeks ago by the New York-based investment bank that it would shut down its origination arm BNC Mortgage, costing 1,200 workers their jobs.
Pain in credit markets and the fallout from providing dicey loans to borrowers with suspect credit has caused a seizing up of deals on Wall Street. The problems have crushed the shares of many financial firms, including
and Lehman, which is one of the biggest U.S. underwriters of structured debt and bonds.
Lehman's planned layoffs come ahead of the investment firm's third-quarter earnings report, set for Sept. 18. The moves suggest that the company is slashing staffers in order to damp losses in other hard-hit finance areas.
"While these moves are extraordinary difficult because of the impact they have on our people, we now have a business that is sized correctly for the current environment and positioned for long-term success," said Ted Janulis, global head of Lehman's Mortgage Capital, in a released statement.
Lehman also announced that its residential mortgage origination and servicing businesses in the U.S., Japan and Europe, including Aurora Loan Services, Libertus and ELQ Hypotheken, will operate under the name Lehman Mortgage Capital.
A Lehman spokesman declined to provide additional comment.
For many on Wall Street, cuts at Lehman's mortgage business have them bracing for further cuts in other finance areas and at other firms.
Since structured debt and securitizations have been at the heart of the credit crunch the markets are facing, expectations are that executives in units such as collateralized debt obligations and leveraged loan may be the next to face retrenching if banks envision facing heavy losses.
Lehman's layoffs did little to encourage investors, who sent the stock down nearly 1%.