NEW YORK (AP) - Merrill Lynch & Co. on Monday said it will cut jobs at its First Franklin Financial Corp. unit, which it acquired less than a year ago, as weakness in the mortgage market weighs on the lender's business.
The world's largest brokerage, which paid $1.3 billion to buy First Franklin in December, would not detail how many jobs would be cut. First Franklin had 2,800 employees at the start of the year. Employees of the San Jose, Calif.-based mortgage lender were informed last week of the cuts.
Merrill rival Lehman Brothers Holdings Inc. already cut more than 2,000 positions in its mortgage lending unit, and competitor Bear Stearns Cos. shed about 240 jobs.
An estimated 50,000 positions have been cut so far this year in the mortgage industry. Besides the major U.S. banks, dozens of small and medium-sized mortgage lenders have gone bust because of defaults and delinquencies from borrowers with shaky credit histories.
"First Franklin has been successful over 26 years because of its ability to adapt to changing market conditions," Merrill said in a statement. "We have adjusted our staffing levels to be in line with current business requirements."
Bill Halldin, a spokesman for Merrill, would not comment beyond the official statement.
Merrill Lynch bought First Franklin in a late bid to cash in on the booming subprime loan industry, which catered to people with poor credit. The brokerage was criticized for paying too much for First Franklin, which was one of the nation's largest non-prime mortgage originators.
Part of Merrill's strategy was to convert First Franklin's loans into mortgage-backed securities, and then sell them in the secondary market.
Merrill Lynch shares fell $1.80, 2.41 percent, to $72.85 Monday.
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