JPMorgan is cutting 30 percent of its research department, according to two former employees, but the bank is keeping mum about its plans and declined to give details of the cuts.
    David DeRose and Leighton Thomas, co-founders of a Bear Stearns alternative research unit that moved to JPMorgan when that bank acquired Bear a year ago, said on Wednesday they sold the unit to an investment firm largely because they could not hire more staff under JPMorgan’s management.
    “If you stay under a research division that’s being cut 30 percent, we can’t get any headcount,” said DeRose.
    JPMorgan intends to shed 1,000 to 2,000 jobs from its investment bank this year, co-investment bank chief Steve Black said at the bank’s investor day in February.
    It was unclear whether the cuts DeRose mentioned are included in these figures and a JPMorgan spokesman declined comment.
    Research staff may be an easy target for cuts, since it is hard to quantify their contribution to the bank’s bottom line.
    And banks’ research divisions across Wall Street have been shrinking since the Securities and Exchange Commission in 2002 banned firms from using banking fees to pay analysts.

By Elinor Comlay

JPMorgan’s Jamie Dimon may have enough on his plate - for now.

With the bank still digesting its two major purchases from last year — Washington Mutual’s banking operations and Bear Stearns — Dimon seems ready to take a break from deals and focus on integration.  

A worsening economy is also keeping the industry on edge. “Common sense tells you it will get worse and we should prepare for that,” Dimon said on a conference call after the bank announced lower fourth-quarter profit. He said 7.5 percent to 8 percent unemployment is “the minimum we’ll see.”

JPMorgan is “not out there looking” for an acquisition. And there is nothing that the bank is looking to divest, Dimon said.  

But Dimon is leaving the door ajar in case opportunity knocks yet again. “We would never say never.”

(Photo: REUTERS/Jonathan Ernst)

Some in the financial industry apparently smell opportunity in the latest round of mergers and blood-letting among top banks.

Referring to the Wells Fargo takeover of Wachovia as the WWF and placing Bank of America CEO Ken Lewis atop a bucking Merrill Lynch bull are just a couple of the attention-getting devices financial sector recruiting firm RJ & Makay uses in its latest promotional You Tube video.

Branching out from a previous video aimed at Merrill Lynch brokers, the new “Billion Dollar Video” (the company claims assets from advisers brought to them via these viral recruiting tools represent billions of dollars) targets all financial advisers but specifically appeals to those currently at Merrill Lynch and Wachovia.

Those brokers are grappling with with the question of whether to accept a retention/transition package, move to another firm or go independent. RJ & Mackay is clearly hoping they’ll opt to walk and chose the firm to advise them on where to go next.

The just over four-minute short could help at least get their attention. It’s an equal opportunity stick poker, targeting all the big hits of this financial season. JP Morgan Chase, Bear Stearns, Fannie and Freddie are all in there along with Lehman, Buffett, Goldman, AIG, Morgan Stanley, Bernanke, Paulson, the government bailout, executive greed, executive kool-aide dispensers and dealing with those pesky gnats, known as recruiters.

Watch here:

A day after Fox-Pitt Kelton analyst David Trone suggested Lehman Brothers Holdings Inc may be better off going private, the investment bank may be ready to do just that. Lehman Chief Executive Richard Fuld is considering ways to take the Wall Street bank private, but it’s not quite clear how such a move might work, the New York Post reported, citing sources. Lehman’s shares have plunged this year on the back of rumors and questions about its solvency. Talks of privatizing Lehman have got serious as a result, the papers said. The company’s shares closed down more than 14 percent on Monday, reaching their lowest level since August 1999. Lehman’s shares have fallen about 81 percent so far this year. Trone said on Monday Lehman may be better off going private to shake off short sellers that are spreading bogus rumors about the bank.

Those nasty rumors, if that’s what they are, may come back to bite some folks on the hindquarters. The Securities and Exchange Commission has sent subpoenas to more than 50 hedge-fund advisers as it investigates whether individuals spread false rumors to manipulate shares in Lehman and Bear Stearns Cos, The Wall Street Journal said, citing a person familiar with the matter. You remember Bear Stearns, right? You know, the one that initially sold for about $2 a share? No wonder Lehman may be thinking about getting out of the stock market limelight.

And now for something completely different (different from Lehman, anyway). Hong Kong phone company PCCW Ltd says it expects to shortlist bidders for its media and telecoms unit within a month. The deal could fetch more than $2.5 billion. Private equity firms are among those bidding for the newly formed unit, known as HKT Group Holdings, group managing director Alex Arena told reporters on Tuesday. Reuters reported on Friday that the Blackstone Group and Providence Equity Partners were among those pursuing a bid for HKT.

More deals of the day:

** Private equity firm Oak Hill Capital Partners purchased eight News Corp television stations for about $1.1 billion.

** Bank of Nova Scotia will expand its wealth-management business by buying the Canadian operations of U.S. online brokerage E*Trade Financial Group Inc for $442 million cash, the companies said.

** Barrick Gold Corp is launching a C$354 million ($350 million) hostile bid for Cadence Energy Inc as a hedge against oil prices to get control of soaring production costs, the world’s top gold miner said.

** Lawson Inc, Japan’s second-largest convenience store, will spend at least 3.98 billion yen ($38 million) to take control of discount grocery chain Ninety-nine Plus Inc, aiming to use acquisitions to grow in a mature market.

** China’s CITIC Resources Holdings has raised its stake in Australian miner Macarthur Coal Ltd to 20.39 percent, overtaking global steelmaker ArcelorMittal as the top shareholder.

** Hungarian drug maker Richter Gedeon said its takeover of Poland’s Polpharma was not completed as scheduled on Monday because Polpharma owner Genefar did not agree to the terms of the closure of the deal.

** French seeds company Vilmorin said it was taking a 25 percent stake in Australian Grain Technologies (AGT) for an undisclosed amount.

** Banca Popolare dell’Emilia Romagna has suspended plans to buy Banca delle Marche, it said in a statement.

** Irish billionaire investors the Quinn family said they would buy a 15 percent stake in Anglo Irish Bank which they saw as a long-term investment despite difficulties facing international banking.

As if having the U.S. Justice Department on your back because your bankers may have been helping wealthy Americans avoid tax wasn’t enough, Swiss banking giant UBS also has to deal with grumpy regulators at home. The head of the Swiss Federal Banking Commission, Daniel Zuberbuehler (pictured), tells us that singling out UBS and Credit Suisse for tough treatment is justifiable and has laid down a tight timetable for new rules to restrain the two. The banks will be required to hoard considerably more capital, which will surely slow them down on Wall St. On Monday, the DOJ said it had asked a federal court in Miami to authorize the Internal Revenue Service to request information from UBS about U.S. taxpayers who may be using Swiss bank accounts to evade federal income taxes. Coughing up tax fraudsters to the IRS could make the sell-off of UBS’s U.S. wealth management backbone - once known as Paine Webber - a tad trickier, but perhaps no less necessary.

A detailed blow-by-blow of the death of Bear Stearns by Vanity Fair’s Bryan Burrough casts current market rumors rumbling about the health of Lehman Brothers in an eerie light. The author, who DealBook notes co-wrote “Barbarians at the Gate,” takes aim at CNBC and hedge funds as it works to uncover what it posits could be the “murder” of the country’s fifth-biggest investment bank. This morning, CNBC’s Charlie Gasparino and DealBook editor Andrew Ross Sorkin are talking about the prospects for Lehman being “taken out”.

High in the “priced to move” column, commercial lender CIT Group agreed to sell its home lending business to private equity firm Lone Star Funds for $1.5 billion in cash to increase liquidity, and said it would take a related second-quarter charge of $2 billion. CIT also agreed to sell its $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance for about $300 million. “These sales complete our exit from all home lending businesses, removing the uncertainty surrounding this asset class,” Chief Executive Jeffrey Peek said. Lone Star will also be taking on $4.4 billion of outstanding debt and other related liabilities. Home lending may not be that far off the path for CIT, but getting out of the business certainly helped tax preparer H&R Block, which announced strong results and a better outlook yesterday, so any price is clearly worth it - CIT’s stock was up over 11 percent in premarket trade.

Manitowoc said it had beaten out Illinois Tool Works in the official auction for British kitchen equipment maker Enodis. Manitowoc said it will pay 328 pence for each Enodis share, or about $2.45 billion, not including the assumption of about $249 million of the U.K. company’s debt. Enodis, which makes fast-food fryers, became the center of a takeover tussle between the two U.S. diversified manufacturers this spring. The two bidders saw Enodis, which counts Burger King and McDonald’s among its customers, as a way to play on rising demand for fast food in markets such as Asia.

Other deals of the day:

* Italy’s third-biggest refiner, Saras, said it has bought a 30 percent stake in an Italian wind power company from Australian investment firm Babcock & Brown.

* InBev stuck to its proposal to take over reluctant bid target Anheuser-Busch and said it would seek to give the latter’s shareholders a direct voice if the U.S. brewer still refused to talk.

* Norwegian recycling equipment maker Tomra said it bought Australian peer Ultrasort for 160 million Norwegian crowns ($31.48 million) in enterprise value.

* State-owned National Bank of Egypt has sold its holdings in six companies for a combined total of 5.29 billion Egyptian pounds ($993 million), the financial daily Al Mal said on Tuesday.

* Indonesia’s largest lender, PT Bank Mandiri, said it had acquired a 51 percent stake in automotive financing firm PT Tunas Financindo Sarana (Tunas Finance), for an undisclosed amount.

* U.S. pork producer Smithfield Foods Inc said that COFCO Limited, China’s largest agricultural trading and processing company, will buy a near-5-percent stake in the company.

* Israeli holding company Koor Industries said it has accumulated 100 million Swiss francs ($98.23 million) worth of shares in Credit Suisse Group.

* Major Chinese engine maker Weichai Power said it has agreed to take a stake in Beiqi Foton Motor under a deal to expand its business ties with the truck maker.

* British telecoms company Cable & Wireless said it was in talks with rival Thus Group about a potential 180 pence-per-share offer for the company.

* Malaysia’s TM International and Indian mobile operator Idea Cellular will launch an open offer on Aug. 22 to buy up to 20 percent of Spice Communications, their investment banker said.

* New Zealand rural services firm PGG Wrightson said it would pay NZ$220 million ($167 million) for a 50 percent stake in meat producer Silver Fern Farms (SFF), sending its shares lower.

* South Korea’s POSCO said it had agreed to buy a 10 percent stake in coal mining firm Macarthur from the Australian group’s shareholder Ken Talbot at A$20 a share.

(Picture: Director of the Swiss Federal Banking Commission, Daniel Zuberbuehler, at a news conference in Bern. 27/03/2007 - Reuters)

The other shoe — or is it an ax — is finally dropping for staff at Bear Stearns, with letters going out this week telling them whether they’ll keep their jobs when JPMorgan’s acquisition is complete.

One Bear employee who works in the emerging markets business in London has received confirmation he will be laid off, he told Reuters on Wednesday. Another in the same department said he was expecting to hear later in the day that he would be retained.

“Some individuals and some businesses are beginning to hear what their status is,” added a source close to the bank.

A third London-based staffer who does not work on a trading desk, but on the business side said: “I’m waiting for my letter from JPMorgan to see about a job offer. I’ve been told verbally there is a job for me, which is a great relief.”

The total number of layoffs is not yet known, but more than half of Bear Stearns employees are expected to lose their jobs. JPMorgan CEO Jamie Dimon has declined approximately one thousand times to give details.

Not that it will come as much consolation to axed Bear Stearns employees, but executives including co-head of fixed-income Jeffrey Mayer, co-heads of equities Steven Meyer and Bruce Lisman, and former CEO Ace Greenberg are known to have survived the purge. CEO Alan Schwartz, CFO Sam Molinaro, controller Jeffrey Farber and general counsel Michael Solender may also eventually accept employment with the bank, according to a U.S. Securities and Exchange Commission filing.

The New York Times reported over the weekend that Ace Greenberg, who started as a Bear Stearns clerk in 1949, is gifting $360,000 to 25 longtime mailroom and clerical employees — $200 a month over six years. Greenberg “has sold over $30 million in Bear stock since early 2007,” the Times reported.

Photo: A man holds a battle ax during three-day Highland Games Festival in Fehraltdorf near Zurich, REUTERS/Stefan Wermuth

JPMorgan Chase boss Jamie Dimon and New York Fed President Timothy Geithner are among the banking executives and regulators testifying before the Senate Banking Committee on Thursday about the Fed-backed takeover of Bear Stearns.

Click here to read Geithner’s prepared opening statement. He justified the Fed-funded J.P.Morgan buyout of Bear Stearns as the lesser of two evils, saying the risks of allowing the bank too fail were too great and unpredictable.

Click here to read Dimon’s statement, in which he says JPMorgan would not have offered to buy Bear Stearns if the Fed had not agreed to absorb billions of dollars in potential losses.

Bear Stearns shares are trading well above $10 after JPMorgan quintupled its offer for the troubled investment bank, and even the most prosaic pieces of memorabilia are keeping pace on eBay.

Following up on our post from last week, Reuters’ Jennifer Ablan reports that a used extra-large men’s T-shirt, blue, with a white Bear Stearns logo sold for a whopping $151.76 on Monday evening.

The T-shirt seller, Jennifer Cseplo of Dublin, Ohio, said her husband got the shirt as a gift four years ago and wore it to work out in.

“I thought I would get $20 for it and be happy. This is pretty crazy,” Cseplo said.

Click here for the full story.

 Ford’s soon-to-be-signed sale of Jaguar and Land Rover to Tata Motors could bring in as much as $2.65 billion, according to local TV, or $2 billion according to the FT. Though the stage appears to be set, a Tata Group spokesman told Reuters discussions were ongoing. Tata Motors, India’s top vehicle maker maker of trucks and busses, received union backing for the deal and was named the front-runner in January by Ford, which is seeking to shore up its balance sheet and reduce debt.

JPMorgan’s revised takeover offer for Bear Stearns is a “high risk transaction,” Punk Ziegel analyst Richard Bove said after JPMorgan boosted its all-stock offer five-fold to about $10 a share. “What is most disturbing about this deal is that it uses a great deal of Morgan capital to buy a company that is losing market share, in a series of businesses that are declining in size, with a top management team that is best described as sclerotic,” the veteran bank watcher wrote in a note to clients. “Investors believe that JPMorgan is underbidding for Bear Stearns… I do not. … Bear Stearns is a deeply troubled company which would have no value if the Federal Reserve had not stepped in to bail it out.”

China’s state-owned aluminum giant Chinalco - which teamed up last month with Alcoa to buy a $14 billion stake in Rio Tinto - may spend more than $4 billion this year on acquisitions at home and abroad, according to the South China Morning Post. That’s no great pile of investment. BHP has bid $147 billion for Rio. Though the company did not specify targets, it said non-ferrous metals would be the main focus.

Top Chinese chipmaker Semiconductor Manufacturing International Corp said it was in advanced talks to sell shares to a strategic investor, sparking a 16 percent surge in its shares. The news comes one year after media reports that the company hired two investment banks to find a strategic partner in a search that ultimately failed to win a suitor. SMIC’s market capitalization is around $1.1 billion.

Singapore state investor Temasek is close to selling its 42 percent stake in Bank Internasional Indonesia for over $1 billion, but not to HSBC. Europe’s biggest bank dropped out of the race, leaving Malayan Banking, Bank of China and late entrant Kookmin of South Korea to duke it out.

The aftershocks of Bear Stearns’ collapse are front and center. China’s CITIC Securities is moving on, formally calling off its $1 billion strategic tie-up; JPMorgan is moving in, ditching plans for a new office building now that it owns the $1.5 billion Bear Stearns HQ.

The Federal Reserve — hours away from the most aggressive rate cut in years — is arranging shotgun weddings for failing financial institutions, but policy makers might be running out of eligible suitors. “There may be some potential buyers left, but the list is looking pretty thin,” said Adam Compton, co-head of global financial stock research at RCM Global Investors.

Across the Atlantic, the European Commission said that while it was not asking for job cuts at stricken British mortgage lender Northern Rock, the bank would have to slim down to be a viable business in the future without state support. UK newspapers reported that one-third of staff could be axed.

Delta Air Lines’ pilots union confirmed that has failed to reach an agreement with Northwest Airlines’ pilots union on how the groups would resolve issues like seniority if the companies merged, the Atlanta Journal Constitution. throwing the long-anticipated deal into doubt. Look for heaps of comment today, as senior execs from the industry debate the future of aerospace at the JP Morgan aviation conference.

India’s Tata Motors has signed a deal to receive a $3 billion one-year bridge loan from Citigroup and JPMorgan to help finance a potential purchase of luxury brands Jaguar and Land Rover, according to sources familiar with the deal. “It is signed, but it’s still at an early process,” said one of the sources, who was not authorised to speak to the media. Tata is expected to agree on a deal by the end of the month to purchase the two well-known UK brands from U.S. auto maker Ford Motor, according to media reports in India.

Chinese aluminum giant Chinalco, which earlier this year led a $14 billion investment in Rio Tinto, is more likely to raise its stake than reduce it. Chinalco and U.S. aluminum firm Alcoa jointly purchased 12 percent of Rio’s London-listed shares, or 9 percent of the total equity of the firm at an average price of almost 59 pounds per share. The shares closed at 50.61 pounds on Monday.

Saudi Telecom plans to spend about $15 billion acquiring firms and licenses outside its home market during the year, according to a report in London-based MEED magazine. The Middle East’s largest telecom company by market value will target mobile phone licenses in Bahrain and Lebanon, and also wants to win the second fixed-line licence in Egypt.