Responding to dismal fourth-quarter earnings, financial services giant Merrill Lynch said today that it will cut 9,000 jobs and take a pre-tax charge totaling $2.2 billion.
The firm expects fourth-quarter net revenues to fall about 8% below the previous quarter, partly because of lower debt trading revenues and investment banking activity. In addition, Merrill, which maintained offices in New Yorks World Trade Center, said it has also suffered expenses associated with relocating its staff in the wake of the Sept. 11 terrorist attacks.
A spokeswoman said the firm isnt disclosing how many cuts will affect its mutual fund-related businesses. But she said half of the reductions are associated with businesses that are either being phased out or outsourced. For example, the firm outsourced its fund accounting business last year to State Street and cut 300 workers from its roles, she said. But those workers did not lose their jobs; they are now employed by State Street.
Merrill has been steadily decreasing its workforce during the past two years. The firm had employed about 72,700 workers as of the third quarter of 2000. A year later it had cut its staff to 66,000. After this round of 9,000 cuts, the company will employ 57,000. The reductions will result in a $1.2 billion charge for the company, largely the result of severance packages.
In addition, Merrill said it will also consolidate offices throughout the U.S. Europe, Asia and Australia. The firm will close or sublet remaining office space in the U.S., which will result in a $500 million charge.