Chase acquires JP Morgan for $34bn, but 10,000 jobs may go

Staff in the wholesale and investment banking operations of JP Morgan and Chase Manhattan are braced for between 5,000 and 10,000 job losses worldwide following confirmation yesterday that Chase is buying its US rival in a $34bn (£25.5bn) all-share deal.

Staff in the wholesale and investment banking operations of JP Morgan and Chase Manhattan are braced for between 5,000 and 10,000 job losses worldwide following confirmation yesterday that Chase is buying its US rival in a $34bn (£25.5bn) all-share deal.

Although senior executives refused yesterday to be drawn on job cuts, William Harrison, the Chase chairman, said he anticipated savings of $1.5bn as a result of eliminating overlap between the two organisations.

Under the terms of the deal unveiled in New York, Chase is offering 3.7 of its shares for one of JP Morgan's.

The merged entity will be called JP Morgan Chase. Sandy Warner, JP Morgan's chief executive, will become chairman, with Bill Harrison, the Chase chairman, assuming the role of chief executive.

Analysts said that while the deal clearly satisfied Chase's long-standing ambitions to acquire a big-hitting investment bank, putting the two together would still leave Chase lagging the investment banking big three - the so-called "bulge bracket" firms - Goldman Sachs, Morgan Stanley and Merrill Lynch, by some way.

Ray Soifer, a noted Wall Street analyst, commented yesterday: "In purely financial terms, it should work. In strategic terms, the jury is still out. It still leaves the combined firm well below the bulge bracket in equity and advisory."

Most of the job losses are expected in New York where the two banks have their headquarters. But London, where there is already fall-out following the recent takeover of Credit Suisse First Boston by Donaldson, Lufkin & Jenrette, will not be spared.

However, bankers say that with houses like Bear Stearns and ABN Amro actively looking for staff, and others such as BNP Paribas and Dresdner Kleinwort Benson rebuilding after a spate of defections, staff displaced by the deal are unlikely to be out of work for long.

In London, the biggest threat hangs over some of the corporate finance, fixed income and research operations of JP Morgan's Robert Fleming, which will probably be gutted, with only a few choice individuals likely to survive. "The equity business is going to be completely canned," said one observer.

Mr Harrison, one of Wall Street's most aggressive dealmakers, made several attempts to take over Merrill Lynch during the past two years, before deciding to focus on building what he could from what was more easily available. The JP Morgan deal follows the acquisition last year of Hambrecht & Quist, a specialist technology advisory boutique, and the purchase earlier this year of Robert Fleming, one of the last of the City's blue chip names, for an eyebrow-raising $7.7bn.