In implementing a cost-cutting initiative, J.P. Morgan & Co. is merely joining other trading banks, analysts said.
Reacting to a report in The Wall Street Journal, analysts noted that the cost cutting is a natural consequence of the slowdown in trading volume.
"They built their factories on the expectation that there would be a certain amount of sales volume," said Raphael Soifer of Brown Brothers Harriman & Co. "If it doesn't materialize, you have to cut back."
Chemical Banking Corp. and Chase Manhattan Corp. are among those known to be trying to cut operating costs and assessing the impact of reduced trading activities.
A Morgan spokesman acknowledged the bank plans to embark on a cost- cutting plan and is evaluating all of its global businesses. He said the bank does not have a specific number of employees targeted for termination and that the cost-reduction plan should be implemented within the next few months.
"We expect to slow the rate of expense growth across the company," the spokesman said. "We want to trim costs and keep up our business momentum."
Morgan's stock was up as much at 62.5 cents early Thursday, when the report came out. The bank's stock ended the day up 37.5 cents, to $61.50.
Analysts said Morgan did not build up its trading business as fast as the other big trading banks in the 1980s, but its expenses continued to rise through 1994.
The bank's costs rose nearly 7% last year, while staffing levels were up 12%.
"Morgan's costs will not be down this year," said Ronald I. Mandle of Sanford C. Bernstein & Co. "It's a mistake to think that."
Mr. Mandle said the bank probably will slow down expense growth this year, but not significantly.
He also said he doubted that the bank would cut staffing levels by as much as 10% - as the report estimated - right away.
"They are taking a much more disciplined approach to reducing expenses this year. They have to tighten the reins on costs. If it is going to happen, it will happen over two years."
According to the analysts, the bank has approved expense reduction targets for its different business segments. But the bank would not say which departments would be affected and how much cutting was to be done.
"They have approved some expense targets for their different businesses," said Mr. Soifer, who added that he spoke with Morgan executives yesterday but they would not confirm the exact amount of the cuts.
"Morgan has planned expense levels," he said. "They are working on how to implement those expense levels, not (planning) an across-the-board cut."
The analysts also said that news of Morgan's restructuring is only one of a number of factors affecting the stock price.
For one thing, they said, the expectation that the Fed will raise interest rates only between 50 and 75 basis points, rather than the previously thought 75 to 100, is driving Morgan's price up along with that of other banks.
They also pointed to more upbeat news coming out of Mexico.
"The (bank) group has been strong on interest rates and economic hopes," said Mr. Soifer.
