Merrill Lynch & Co., the largest U.S. brokerage firm, said it plans to cut 60 jobs in its stock and bond research department, the latest move to reduce costs as securities firms brace for a business slowdown.
The cuts, which Merrill began telling employees about on Wednesday, would amount to about 4% of the 1,600-person research unit and would include analysts and support staff. Last year, Merrill eliminated 1,800 jobs in its brokerage unit as the divisions new chief, Stanley ONeal, sought to shore up profits.
The need to cut costs has become more important as investment banking business has slowed, with a drop in initial public offerings and fewer high-yield bonds sold in the final three months of 2000 than a year earlier.
Investment banks are looking out at an uncertain environment and realize they have to start cutting costs to keep the bottom line afloat, said James Mitchell, an analyst at Putnam Lovell Securities Inc. Sometimes they can be too quick to cut, but they can handle 4% pretty easily.
The New York-based Merrill, which had 72,700 employees at the end of September, is the biggest Wall Street firm to cut jobs amid the stock market slump. Goldman Sachs Group Inc. and Morgan Stanley Dean Witter & Co. have said they would slow hiring.
Banc America Securities plans to lay off about 100 people in its corporate and investment bank this month. Prudential Securities Inc., the brokerage unit of Prudential Insurance Company of America, is cutting 160 bankers from its 250-person investment bank. Charles Schwab Corp., the largest online broker, is cutting the salaries of its top 750 officers.
Merrill spent $3.1 billion on compensation in the third quarter, or 51.2% of net revenue. With the help of cuts in the brokerage unit, that was a decline from compensation accounting for 52% of net revenue in the year-earlier quarter. Merrill is to report fourth-quarter and 2000 earnings this month.