US investment bank Lehman Brothers said on Wednesday that it has decided to close its subprime-lending unit BCN Mortgage, and added that 1,200 employees will lose their job, about 4% of Lehman's workforce. The move will cut third-quarter earnings by $52 mln, the lender said in a statement.
US investment bank Lehman Brothers said on Wednesday that it has decided to close its subprime-lending unit BCN Mortgage, and added that 1,200 employees will lose their job, about 4% of Lehman's workforce. The move will cut third-quarter earnings by $52 mln, the lender said in a statement.
'Market conditions have necessitated a substantial reduction in resources and capacity in the subprime space,' the New York-based firm said. Lehman added that it will continue to originate mortgages through its Aurora Loan Services LLC platform, which focuses on mortgages to people with a better credit history.
Lehman Brothers, one of the biggest underwriters of US mortgage-backed bonds, has profited from the subprime mortgage business since 2004, but investor appetite for this type of product has waned in recent weeks due to deferred or defaulted payments on the loans.
