Shearson Lehman Bros. plans to cut about 7,000 jobs from the combined payroll of itself and E. F. Hutton during the next year or so because of the merger of the two brokerage firms, a top Shearson official said Wednesday.
Few if any of the cuts will be in Southern California, however, with the bulk in New York and achieved through attrition instead of layoffs, said Hardwick Simmons, a Shearson vice chairman and chief of its retail brokerage operations.
"Attrition will take care of a great deal of it," said Simmons, who was in Los Angeles on Wednesday to speak to reporters and to local brokers of both firms.
Simmons' comments, in which he said employment at the combined firms will fall about 15% to 40,000 from about 47,000 currently, was the first public disclosure by a top Shearson official of the job reductions from the $1-billion merger, which was agreed to last week and will create the nation's largest brokerage firm.
Industry experts had estimated that Shearson would lay off about 5,000 workers, but Shearson Chairman Peter A. Cohen had said that estimate was too high. He did not provide his own figure, however.
The cuts will be the largest among a growing number of layoffs on Wall Street stemming from the market crash, tighter business conditions and overexpansion.
L.F. Rothschild, for example, said earlier this week it will dismiss 700 employees, or 40% of its workforce, over the next six months. Kidder, Peabody & Co. last week said it will cut 1,000 jobs, or about 15% of its workforce.
Simmons said the bulk of the job losses will be among "back office" personnel who process orders generated by brokers.
Annual job turnover among back office workers is about 40%. However, none of the 900 back office personnel in Southern California branch offices will be dropped, he said.
90% of Jobs Lost in New York
Overall, 90% of the total jobs lost will be in New York, he said, including some investment bankers and traders.
The firm, however, does not plan to drop any Hutton or Shearson retail brokers, or Hutton's top executives in the retail brokerage side, Simmons said.
"Those are the people who generate the revenue," he said, adding that Shearson also does not plan to close any retail offices--at least for now--even though some Shearson and Hutton branches are in the same building.
"We spent $1 billion (on the merger) to acquire Hutton's brokerage force," Simmons said, noting that retail brokerage has been Hutton's strength.
"I doubt there will be any consolidations (in retail brokerage) that will lead to losses of jobs."
Simmons acknowledged that other firms have been trying to hire away some of Hutton's top brokers.
To retain them, he said, Shearson is offering bonuses that in some cases exceed 20%. Shearson brokers also would be offered bonuses, he said.