Lehman Brothers is poised to cut a further 1,200 jobs as the struggling Wall Street brokerage tries to bolster its balance sheet by reducing costs and selling assets.

The redundancies, expected to be finalised and announced possibly before the group reports its third-quarter results in two weeks’ time, would mark Lehman’s fourth round of job cuts in the past 12 months. They would represent about 5 per cent of its remaining workforce and bring total redundancies to about 6,400 since June last year.

Although details have yet to be finalised, the job losses are expected to be felt right across Lehman’s operations, including those in the City.

Most of the recent cutbacks have fallen in Lehman’s mortgage-related businesses, but more jobs are expected to go this time from the investment banking and trading division as the group’s efforts to cut costs spread further through the business.

Lehman is not alone among financial services companies to cut jobs. Banks and securities firms have eliminated 101,250 posts across the world since the credit crunch took hold, according to Bloomberg. Many of these losses have stemmed from efforts to cut costs as the institutions have taken a collective credit crunch-related writedown of more than $510 billion (£281 billion).

Lehman is widely regarded as Wall Street’s most vulnerable firm. Mounting losses on mortgage-related investments and the expectation of more to come have pushed the shares down by about 75 per cent this year. The bank reported a loss of $2.8 billion in its second quarter, compared with a $1.3 billion profit last year.

Analysts have forecast that the bank will suffer a further loss in its third quarter, which ends tomorrow, amid expectations of a credit crunch-related writedown for the period that could be as high as $4 billion.

The group might sell its asset management division, which includes Neuberger Berman, the fund management business. Kohlberg Kravis Roberts and Bain Capital, the private equity firms, are seen as the favourites to acquire the unit, should a sale go ahead. Lehman is also sounding out potential buyers for $40 billion of troubled commercial mortgages and property on its balance sheet.

At the close in New York last night, the shares were up 22 cents at $16.09.

Lehman declined to comment on possible job cuts or asset sales.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax