Bear Stearns aims to triple London staff

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Bear Stearns plans to triple its European staff over the next two years, which could mean hiring more than 2,000 employees in London.

Michel Péretié, Bear Stearns' chief executive in Europe, has been authorised to expand the US bank's staff from 1,200 to 3,500 by 2009, when the bank moves its European headquarters to Canary Wharf, according to bank sources.

One insider said: "Péretié has been given the power to grow Europe independently of the US. Lehman Brothers, Goldman Sachs and Morgan Stanley have 40% of their business outside the US while we have only 14%."

A bank spokeswoman confirmed it planned to grow but declined to comment on numbers.

The bank employs 12,500 around the world. Its London staff has risen from 700 three years ago but Europe accounts for less than 10% of its total personnel. The planned increases would raise that proportion to almost 25%.

Bear Stearns added staff in equities and distressed debt last year, mostly in Europe. Its revenues have been increasing and it made a record profit of $1.5bn (€1.2bn) in the nine months to August. Almost half its turnover came from fixed income and almost a quarter from equities, while other investment banking advice accounted for 10% and asset management about 5%.

However, the changes come amid warnings that the investment banking cycle has passed its peak and smaller banks have been trimming staff numbers - although bankers say European companies have more cash than before to spend on acquisitions and plenty of capacity to raise debt.

Lehman Brothers has hired in Europe for three years with no improvement in its league table position.

Bear Stearns made European growth a top priority back in 2000, when it had just 250 staff in London, hiring Jeremy Sillem from financial advisory firm Lazard as international chairman. But more than half its European investment bankers left following cost cutting between 2001 and 2003.

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