JPMorgan Chase & Co. and Bank of America, the two biggest U.S. banks, reportedly are both cutting senior mortgage traders and salespersons as the asset-backed securities market declines.  Both are re-evaluating staffing on mortgage-trading desks, in response to market-wide pressure to cut expenses and and to stricter capital requirements tied to the assets.  Some employees reportedly were offered severance packages allowing them to keep millions of dollars of deferred stock that otherwise may have been forfeited. JPMorgan Casualties. Raphael Gonzalez, co-head of trading in subprime mortgages, and John Angelica, a securitized-products salesman, resigned from JPMorgan within the past 4 weeks - in exchange for severance packages that included all of their deferred stock awards, anonymous sources report.  Roy Kim, who traded adjustable-rate mortgages, also reportedly left on his own accord with a similar exit deal. The bank also dismissed about 5% of its equities traders and salesmen in New York on Tuesday, and cut about 100 employees in its treasury and securities services division in January, according to 3 different people with knowledge of those moves.

"When you start doing something like this, you’re making a forward statement about the mortgage-backed security market -- they are saying it isn’t going to be as active.  Firms are right-sizing for the fixed-income market of the future.  We’ll probably be seeing this in a lot of other Wall Street businesses as the regulations become clear."   -- Brad Hintz, Sanford C. Bernstein & Co. analyst.

Trading in securitized products at the 10 biggest global investment banks dropped to about $10 billion last year from about $17.5 billion in 2010, according to data from consultant Coalition Ltd. Bank of America Moves. BofA eliminated at least half a dozen traders and salesmen in its mortgage unit this week.  John McNiff, a managing director who served as co-head of commercial mortgage securities trading, resigned, said people with knowledge of the moves.  Managing directors Seth Jackier in mortgage sales and John Eck in asset-backed trading also opted to leave.  Michael Case, a director in commercial mortgage security banking, and salesmen John Livingstone and Michael Miller also departed. Some BofA employees volunteered to resign in exchange for a so-called "garden leave" - a period of about 90 days in which they receive full salary and benefits while staying at home, as well as severance packages, the people said. The bank also is cutting outside the U.S., dismissing almost a dozen workers at its Canadian capital-markets business as part of a global staff reduction. The move reportedly leaves the bank with almost 500 people at offices in Toronto, Montreal, Vancouver, and Calgary.

"Areas like this that didn’t come back as expected are the ones that companies are now evaluating."  "This isn’t necessarily bad news” for people who may have been considering moving to other firms.  -- Jeanne Branthover, MD at Boyden Global Executive Search Ltd.

For further details, go to:  [Bloomberg 3/21/12].