WaMu To Lay Off 4,600 in Bay Area, Seattle

JP Morgan notified WaMu employees on Thursday that it would close the 1,200-person, 217,000-square-foot Washington Mutual operations (call) center in Pleasanton by early spring of 2009 and that it will eliminate 400 jobs in its San Francisco operations center at 201 Mission St. in advance of a full shutdown of the center in late 2009 or early 2010, according to multiple local reports on Friday. A WaMu spokesperson did not immediately return a GlobeSt.com phone call seeking independent confirmation.

The Seattle Times this week reported that as many as 3,000 of WaMu's 4,200 workers in Seattle could lose their jobs , citing current and recently departed WaMu executives who spoke on condition of anonymity. WaMu owns a brand new 900,000-square-foot office tower in Downtown Seattle and leases an additional 700,000 square feet in nearby buildings. For more detail on WaMu's real estate portfolio in Seattle and the Bay Area, see GlobeSt.com's Oct. 1 article titled WaMu Sale To Impact West Coast CRE.

JPMorgan has until Christmas Eve to decide which WaMu leases it wants to keep, according to its agreement with the FDIC, which arranged its sale to Chase. Under that arrangement, Chase can abandon any space it does not want without penalty and the landlords would become creditors in WaMu's receivership, which is the FDIC's version of bankruptcy. If anything, compensation is likely to be pennies on the dollar; while WaMu's assets total $1.9 billion while its creditors--landlords, debt holders and shareholders--are expected to total more than $13 billion.

The layoffs are part of JP Morgan's integration plan, which includes combining the two banks' duplicate operations such as information technology, human resources, legal and risk management and call centers. For example, the WaMu operations center jobs being cut in Pleasanton and San Francisco will be handled at JP Morgan's operations center in Delaware.

Adding to the troubles is the general contraction in the financial services sector, which is expected to continue through next year along with the housing market, which is expected to experience more foreclosures in 2009 than it did in 2008. That having been said, JP Morgan says it plans to add staff to WaMu's retail banking operation in 2009.