WaMu job losses in Seattle could total thousands
JPMorgan Chase may cut as many as 3,000 WaMu jobs in Seattle in the next few months, according to current and former executives.
Seattle Times business reporters
WaMu's shrinking footprintNEW OWNER JPMORGAN CHASE is expected to lay off thousands in Seattle, leaving gaping holes in downtown's real-estate market, where WaMu now occupies more office space than any other company.
Current employees: 4,200
Office space: 1.6 million square feet
Washington Mutual's new owner, JPMorgan Chase, is expected to lay off thousands of Seattle workers over the next several months as it shifts operations to its New York headquarters and other business centers around the country.
JPMorgan is handing out layoff notices now and is expected to finish making decisions about all of WaMu's 43,200 employees nationwide by Dec. 1.
As many as 3,000 of WaMu's 4,200 workers in Seattle could lose their jobs, according to current and recently departed WaMu executives who spoke on condition of anonymity.
"It's pretty dire for Seattle," said one former high-ranking executive.
The layoffs will leave gaping holes in downtown Seattle's commercial real-estate market, where WaMu occupies more office space than any other company.
Some WaMulians, as employees of the 119-year-old bank call themselves, will leave in January. Others will be paid bonuses to stay through a transition period of several months.
A small group is being offered jobs elsewhere in JPMorgan, such as Columbus, Ohio, the support center for much of its Chase retail-banking operation.
JPMorgan's other major business sites include credit-card operations in Wilmington, Del., commercial banking in Chicago, investment banking and asset management in New York, and a mortgage operation largely based in Iselin, N.J.
Although JPMorgan wants most of WaMu's branches and some of its lending operations, sources said, it has little need for duplicated headquarters services such as information technology, human resources, legal and risk management. It also is wrapping most of WaMu's San Francisco-based credit-card operation into its credit-card business in Delaware.
JPMorgan spokesman Tom Kelly declined to comment specifically on its layoff plans. The bank has not decided whether to disclose publicly the number of WaMu or Seattle jobs it eliminates, he said.
The bank is known for keeping costs in line, especially when it buys another company and when profits suffer like they have lately.
After acquiring the investment bank Bear Stearns last summer, JPMorgan reportedly offered jobs to 6,500 of Bear's 14,000 employees, and also cut 2,000 JPMorgan positions.
"They're brutal that way," said the former high-ranking executive. "When profits are down, they lay people off."
WaMu occupies roughly 1.6 million square feet of office space in downtown Seattle.
Most of its employees work at the headquarters building, WaMu Center, at Second Avenue and Union Street, where it owned about 900,000 square feet. JPMorgan bought the headquarters in September, when it acquired most of WaMu's assets from the Federal Deposit Insurance Corp. for $1.9 billion.
WaMu leases about 800,000 square feet downtown, including space from the Seattle Art Museum that adjoins its headquarters building.
WaMu also leases large amounts of space in the Washington Mutual Tower at 1201 3rd Ave., the 1111 Third Avenue building, the Second & Spring building and the Newmark Tower. Kip Spencer, co-founder of the online database Officespace.com, said some of those leases aren't scheduled to expire until 2017.
If JPMorgan walks away from them, "it's difficult to predict the impact," Spencer said. "Something of that magnitude has never happened in this market before in my experience."
It almost certainly would shift the negotiating balance between landlords and tenants, he said.
JPMorgan has until Dec. 24 to decide which WaMu leases it wants to keep, according to its agreement with the FDIC.
Under that agreement, it can walk away from any space it does not want, and the landlords would become creditors in WaMu's receivership. A receivership is like bankruptcy, except with decisions made by the FDIC rather than a bankruptcy judge.
As creditors, the landlords would join others in claiming a piece of $1.9 billion in assets, the money that JPMorgan paid for WaMu. Other creditors in the receivership, who may include landlords, debt holders and shareholders, already say they are owed $13.8 billion from WaMu, according to the FDIC. The receivership is separate from the bankruptcy of Washington Mutual Inc., the bank's parent company.
JPMorgan spokesman Kelly said it is "working through what space we're going to need across the country."
WaMu's downtown Seattle landlords said there's plenty of confusion about what's happening.
"It's all kind of uncharted territory," said Greg Johnson, president of developer Wright Runstad.
WaMu leases 180,000 square feet in the Washington Mutual Tower at 1201 3rd Ave., which Wright Runstad manages and co-owns.
If JPMorgan decides it doesn't want that space, "in that case we get a nice letter from the FDIC telling us to tear it [the lease] up," Johnson said.
But most of WaMu's space in the tower already has been subleased, Johnson said, and standard leases contain language making the sublessee the direct tenant if the old primary tenant can't perform.
Nicole Griffin, a spokeswoman for the Seattle Art Museum, said it receives net income of $2.6 million a year from the space WaMu leases.
She declined to speculate about what might happen if JPMorgan backed out of that space.
"Of course, that's a large amount of money," she said, "but it's also a fabulous space."
Melissa Allison: 206-464-3312 or email@example.com
Eric Pryne: 206-464-2231 or firstname.lastname@example.org
Copyright © 2008 The Seattle Times Company
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