New York – Bear Stearns Cos. this week began sending letters to clients reassuring them that the firm was financially sound, in an effort to keep people from withdrawing their business.
The letters, along with a list of client talking points provided to employees, are aimed at allaying fears about the company’s fiscal shape. Clients have been seeking reassurance since the company put two distressed hedge funds in bankruptcy, ousted co- president Warren Spector and came under review for a rating downgrade by Standard & Poor’s.
The New York-based investment bank, the fifth-largest on Wall Street, has triggered concern about Wall Street’s exposure to the distressed mortgage and corporate-buyout markets. Bear Stearns lost face this summer when it said two multibillion-dollar hedge funds that made heavy bets on mortgage-backed securities were all but wiped out.
“The Bear Stearns franchise is financially strong,” the letter said in part. “Rest assured, Bear Stearns has seen challenging markets before and has the experience and expertise to serve you and us well.”
The offensive comes as Jimmy Cayne, the company’s longtime chairman and chief executive, has called counterparts at major Wall Street banks to reassure them about market rumors.
There have been fears that major companies would lose faith in Bear Stearns, pull their business and create a run on the bank.
Cayne also has called top institutional shareholders in recent days, which has helped to prop up the company’s slumping stock price. Shares have lost nearly a third of their value this year but battled back in recent days, gaining 13 percent since Friday.
