Bear Stearns cuts jobs

NEW YORK: Bear Stearns moved to cut jobs at two home-lending units because of the housing slump even as a 13% increase in shares of the fifth-largest US securities firm signalled that it may be close to getting a cash infusion from an investor.

Encore Credit, a Bear Stearns subsidiary in Irvine, California, will eliminate 100 positions, a person with direct knowledge of the matter said on Thursday. Bear Stearns Residential Mortgage, based in Scottsdale, Arizona, is reducing its workforce by 140, according to the person, who declined to be named because the number of jobs isn’t being made public.

While the fallout from the subprime-mortgage crisis threatens to cut Bear Stearns’s profit by as much as 13% this year, speculation is growing that the New York-based firm will find a partner willing to keep it financially healthy. Richard Bove, an analyst who worked with Bear Stearns president Alan Schwartz in the 1970s, said the firm’s rising share price made an agreement “seem possible.”

“There are rumours around that there’s rescue financing coming in for some of the financials, particularly for Bear Stearns,” Barton Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said in an interview. Bear Stearns shares jumped $13.29 to $116.44 at 4 pm in New York Stock Exchange composite trading. It was the stock’s biggest gain since October 1998.

Chief executive officer James Cayne has been prospecting for investors in China and may sell a minority stake to Citic Group, Forbes magazine reported on August 9, citing an unidentified person close to the Beijing-based company.