Jobs at risk as Lehman Brothers faces further writedowns

by Gill Montia

Story link: Jobs at risk as Lehman Brothers faces further writedowns

Lehman Brothers Holdings is planning to reduce its headcount by 1,200, adding to the 4,000 job cuts already made this year.

The latest round of cost cutting could affect around 5% of the group’s workforce.

Details have yet to be finalised but the job losses are expected to span Lehman Brothers’ entire operations, including those in the City.

The fourth-largest investment bank in the US is also reported to be looking for buyers for $40 billion of commercial mortgages and property.

The bank is currently believed to be the most vulnerable on Wall Street because write-downs on its commercial and residential mortgage assets could substantially reduce its value.

The business is widely seen as undercapitalised and is rumoured to be considering bolstering its balance sheet with the sale of its asset management division, which includes fund management unit, Neuberger Berman.

The bank reported a loss of $2.8 billion in the second quarter of 2008, compared with a $1.3 billion profit in the same period of 2008.

A further loss is expected in the three months to the end of August, with analysts predicting writedowns of up to $4 billion during the quarter.