Washington Mutual said last night it would cut 3,150 jobs, slash its dividend, and raise $2.5 billion in capital as it sees losses from mortgages rising through 2008.
The bank said a sharp downturn in demand for mortgages was forcing it to eliminate 2,600 mortgage and 550 corporate support jobs, or 11 per cent of its entire staff, close 190 of 336 mortgage offices and stop making loans to borrowers with poor credit.
Washington Mutual is also reducing its dividend payout 73 per cent to 15 cents a share.
Mutual was the 6th largest US mortgage company for the first nine months of 2007, according to the trade publication Inside Mortgage Finance. Exposure to a struggling mortgage industry has weighed on Mutual's stock, however, which is down 57 per cent over the past year.
Mutual, whose shares fell 8 per cent in after-market trading yesterday, forecast that mortgage originations nationwide would fall 40 per cent to $1.5 trillion.