Merrill Lynch Is Expected to Cut 2,000 Jobs

Merrill Lynch & Co. plans to fire up to 5% of its traders, analysts and investment bankers, eliminating about 2,000 jobs amid shrinking profit, people familiar with the company said Wednesday.

The biggest U.S. securities firm is expected to announce the cuts next week, with bond and emerging markets staffs likely to suffer the most, they said. Fewer job losses are anticipated in equities and investment banking. Merrill, with about 60,300 employees, isn’t likely to make many cuts in its staff of 16,300 brokers, the nation’s largest sales force.

Wall Street is bracing for the largest round of job cuts unrelated to mergers since 1995, as losses from Russia and other emerging markets pile up and investment banking slows.

Salomon Smith Barney Inc. may fire as much as 5% of its staff, people at the firm said. A spokeswoman for Salomon, a unit of Travelers Group Inc., declined to comment.

Merrill probably won’t make major cuts in its asset management unit or the group that advises companies on mergers, the people familiar with the firm said.

A Merrill spokeswoman said no final decisions have been made about staff reductions.

Merrill shares fell $4.19 to close at $37.75, the lowest since November 1996, on the New York Stock Exchange.

Russia’s default and currency devaluation, falling stocks and wrong-way bets in U.S. bonds are hurting profits in the securities industry. Revenue growth from underwriting stocks and bonds and advising in mergers also is slowing.

New York-based Merrill lost $135 million in trading during July and August, leaving it with profit of $102 million for the first two months of the third quarter. The firm earned more than $500 million in each of the first two quarters this year.

Goldman, Sachs & Co. analyst Richard Strauss on Wednesday cut his estimate for Merrill’s third-quarter earnings to 40 cents, down from an earlier forecast of 58 cents. Merrill reports third-quarter profit next week.

Salomon Smith Barney posted a $150-million loss for the first two months of the third quarter.