United States investment bank JP Morgan yesterday confirmed it was planning to cut up to 700 jobs, in the face of spiralling costs and losses incurred in its operations in the region. The bank, which employs 16,900 people worldwide, said the cuts would probably be spread around the world, but sources last night indicated its operations in the region could be the worst hit. Last month, the group disclosed a 35 per cent drop in its fourth-quarter earnings to US$271 million, exacerbated by losses in swap contracts in Asia, of which $587 million worth were adjudged to be non-performing. Global credit revenues dropped 31 per cent to $168 million due to the deterioration of credit quality in Asia, particularly in South Korea and Thailand. The bank had overall outstandings and commitments in Indonesia, Korea and Thailand of about $5.4 billion. JP Morgan has now recorded $24 million of write-offs in relation to its dealings in the region, and it believes about 60 per cent of its aggregate allowance for credit losses relates to Indonesia, Korea and Thailand. The bank employs about 400 people in Hong Kong, and has offices in Singapore, Tokyo, Seoul, Manila, Bangkok, Taipei, Kuala Lumpur, New Delhi and Australia. Officials said they could not comment on where losses would be greatest, but analysts suggested the United States and Asia were the prime contenders. 'In Europe, they are still not where they want to be in terms of market share or in terms of winning new mandates, and they will want to continue to intensify their efforts,' one analyst said. 'In the US, they have one too many high-priced stars, and the hirings have not yet turned into the kind of profits that they want, while Asia is just a problem that they probably see as needing to rationalise.' Analysts said most investment banks were viewing Asia with more caution since the outbreak of the financial market turmoil. They said the banks saw greater opportunities in debt capital market financing in the region, although this had yet to reach the kind of level that would attract large numbers of banks. News of the proposed cutbacks emerged after a memo was sent to staff by JP Morgan chief executive Douglas Warner, who indicated the bank needed to undergo restructuring in order to boost productivity. In three of the past four years, growth in expenses has been higher than growth in revenues, and the bank is becoming increasingly keen to raise profitability. 'The key element of this memo is that it looks like JP Morgan want to be a leaner operation and target its business better, to areas where there is the greatest scope for growth,' an analyst said. 'That means Asia, which is expected to be in the doldrums for some time, must be going on the back-burner.' Mr Warner has ambitions for JP Morgan to join the so-called 'bulge bracket' group of banks, which comprises the global giants Merrill Lynch, Goldman Sachs and Morgan Stanley Dean Witter. Its original business was predominantly in commercial banking, but it wants to become increasingly active in investment banking. JP Morgan also wants to further build its asset management business, and expand into personal financial services. By the end of last year, the bank had about $250 billion under management, and its private clients accounted for an estimated $160 million of revenues in the fourth quarter.