JP Morgan quits Wellington as brokers slash staff

By DANIEL RIORDAN

Sharebroker JP Morgan is closing its Wellington office as the impact of the global downturn in financial markets continues.

Estimates of how many staff will be affected vary. Broking sources told the Business Herald that about a dozen would lose their jobs.

Research done by the Wellington office will move to Sydney, and it is understood that a couple of analysts have been offered jobs across the Tasman.

JP Morgan New Zealand investment banking head Tony Pigou said in a statement that the company's operations were being centralised through the Auckland offices, but he did not return calls.

Overseas-owned sharebroking firms have been shedding staff and offices since the high-tech bubble burst this year.

Morgan's parent company, New York-based JP Morgan Chase & Co, the second-largest bank in the United States, was reported this week to be cutting 8000 jobs globally because of the sluggish market, up from previously announced plans to eliminate about 5000 positions.

Like many of its rivals, the parent company has come under intense pressure this year as a result of the slowing economy and the significant downturn in financial markets.

Last month, the company reported that second-quarter earnings tumbled more than 76 per cent as the bank faced steep declines in fees from underwriting and stock trading and big losses in its venture-capital division.

Australasian firms were making a better fist of things than global firms, which were retrenching, said one sharebroker, who asked not to be named.

"Someone sitting in New York decides they have to cut costs because business is drying up - maybe because they expanded too aggressively through the high-tech bubble - so they have to chop off a few heads.

"The edict goes around the world. Australia gets managed as one entity, and some idiot in Australia decides the easiest thing is to close New Zealand down, because they don't have to take too much flak from Australian staff."

JP Morgan's New Zealand retail operations - employing 30 of its 36-strong team - were bought by Macquarie Equities in May, a few months after JP Morgan took over Ord Minnett.

Staff had no desire to work under long-range American ownership, which left a research team in Wellington with a handful of institutional dealers, and institutional dealers and investment banking in Auckland.

Ownership changes have been rapid in the industry.

At the weekend, CS First Boston announced that it was cutting back its Asia-Pacific investment banking staff by up to 15 per cent and Citicorp last week talked about cutting its worldwide staff by about 2000.

This year, ABN Amro Craigs (itself recently formed from a merger) took over the local retail broking arm of US-based Merrill Lynch.

That was after a worldwide restructuring of Merrill's operations that saw most New Zealand business handled from Australia.

About the same time, Forsyth Barr became the country's biggest private client broking firm after mergers with Frater Williams and Cavill White Securities.

Deutsche Bank this month moved its New Zealand-based broking arm to Australia.