Credit Suisse Cuts 150 Jobs in Mortgage Backed Operations

Credit Suisse Group said Wednesday it will lay off 150 employees, mainly from its mortgage-backed securities unit, as a result of market turmoil caused by the U.S. subprime mortgage crisis.

“In line with the current environment and outlook, we’ve made targeted reductions, primarily in mortgage-backed securities businesses,” spokesman Andreas Luther said.

An estimated 50,000 positions have been cut so far this year in the mortgage industry.

Lehman Brothers Holdings Inc. has cut more than 2,000 positions in its mortgage lending unit, while HSBC Finance Corp., a unit of HSBC Holdings Plc., said last week it would close its wholesale mortgage lender Decision One Mortgage, which originates subprime mortgages through brokers. The HSBC move will affect about 750 employees.

Subprime mortgages are loans given to customers with poor credit. Banks and investors have shied away from originating and purchasing subprime mortgages because of defaulting growing in the risky loans.

Andreas Venditti, an analyst at Zuercher Kantonalbank, said Credit Suisse’s cuts reflect the slowdown as a result of the crisis in issuing mortgage securities, which has been a big business for investment banks in recent years.

“Unlike private banking, investment banking is incredibly dynamic on both sides. When business slows, jobs are cut very quickly to adapt,” Venditti told Dow Jones Newswires.

Credit Suisse does not write mortgages, but it has been a leading player in packaging home loans into securities. Shares fell 0.3 percent to 76.45 Swiss francs ($65.31) in Zurich trading.

Credit Suisse to Cut 150 Jobs - Credit Suisse to Cut 150 Jobs As a Result of Subprime Crisis