JPMorgan Chase & Co. will become an even bigger Wall Street player once it absorbs troubled Bear Stearns Cos. Inc. but the combined companies' Los Angeles footprint is likely to become much smaller.

JPMorgan, which last week announced a government-backed plan to acquire the nation's fifth largest investment bank, has roughly 350 employees in the greater Los Angeles area. Bear Stearns has about 275, most of them involved in the now out-of-favor mortgage-backed securities business.

The nation's third largest bank by assets, JPMorgan is unlikely to need anywhere near 600 people in Los Angeles, even if the U.S. financial crisis is close to hitting bottom as at least one analyst suggested last week. Layoffs are expected.

"We believe (J.P. Morgan) will be successful in squeezing redundancies," Oppenheimer and Co. Inc. analyst Meredith Whitney said last week in a client's note.

What's more, J.P. Morgan Chief Executive Jamie Dimon has a reputation of cost-cutting in the name of economies of scale when he takes over a company.

Dimon was chief executive of Bank One, then the nation's fifth largest bank, when it was acquired by J.P. Morgan Chase in 2004. Dimon became Morgan's president, moving up to chief executive in 2006, adding the chairman's title the following year.

"He has his way of doing business, and people he's worked with and trusted for years," said Richard Bove, an analyst for Puck Ziegel & Co. "When he took over Bank One he wiped out just about everything they had top executives were gone, systems were changed, everything was new. He did the same thing when he got to J.P. Morgan Chase."

Both companies have regional offices in Century City, with J.P. Morgan also having operations in downtown Los Angeles. According to a Business Journal industry list published last month, Bear Stearns has the 12th largest securities brokerage operation locally, including 76 registered securities brokers, 25 investment bankers and an undisclosed number of back office staff. Similar breakdowns of local J.P. Morgan employees were not available, though a company spokesman said investment banking was its primary local focus.

Prime brokerage

Bear Stearns' profitable prime brokerage unit, which provides loans and processes trades for hedge funds and has Los Angeles operations, is among the assets that J.P. Morgan is likely to hang on to after the merger. But it's unclear how many people with mortgage-based securities expertise J.P. Morgan will want to keep for the day that market recovers.


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