Bear Stearns interns learn about business the hard way

— -- For much of this school year, Fabienne Bruneau spent three hours a day compiling summaries of major financial news stories, preparing for a competitive recruiting process for internships at major Wall Street banks.

After a 4½-hour interview with Bear Stearns earlier this semester, the New York University junior landed a summer position in its global equities division with the sales and trading team. This month, she was notified she had lost her internship, a casualty of JPMorgan's recent purchase of Bear Stearns to prevent it from going bankrupt.

"You feel like you won the lottery, and now someone stole it away from you," she says.

Bruneau is just one of hundreds of Bear Stearns hires questioning their futures after the fire sale of the country's fifth-largest investment bank and deep cutbacks at other banks. At least 105,000 financial jobs have been lost since March 2007, according to the Bureau of Labor Statistics. The U.S. banking industry could drop another 150,000 to 200,000 jobs in the next 12 to 18 months, estimates financial consulting firm Celent.

Because JPMorgan hired its own summer interns, it can only absorb Bear Stearns' intern hires in areas where the two firms' operations didn't overlap. Those businesses include prime brokerage, commodities, asset management and merchant banking. Bear Stearns hired about 300 full-time employees and 300 interns this year. JPMorgan has taken on roughly 60% of them, says JPMorgan spokesman Brian Marchiony.

Non-profit opportunities

Those who don't work at JPMorgan this summer won't necessarily lose out on paychecks, though. JPMorgan is coordinating internships for Bear Stearns hires at non-profit organizations in strategy, finance, marketing and project-management positions and will pay them the same summer salary they were promised by Bear Stearns, Marchiony says. Those interns will also be among the first round of external applicants considered for full-time jobs in the fall. The company has no figures yet on how many hires will take non-profit offers.

On Wall Street, undergraduate investment banking interns typically make about $13,000 to $14,000 a summer, while MBA interns make around $20,000 a summer.

Bruneau has not been officially placed with a non-profit internship and is unsure if she will even decide to go that route. She's still hoping to gain experience with a financial company this summer. Bruneau says she's trying to remain positive.

Students who accept JPMorgan's non-profit offers may lose out on hands-on Wall Street experience and an express ticket to a job after graduation, as investment banks frequently hire their best summer interns for full-time jobs, says Trudy Steinfeld, executive director of New York University's Wasserman Center for Career Development.

"They really counted on having that banking experience this summer," she says. "Now some of them are not sure where that job is going to materialize."

That's what concerns Gabe Marans, an NYU junior who planned to work as an intern at Bear this summer.

"The loss of the Bear Stearns offer took away a potential opportunity for full-time employment in an increasingly hostile job market for college graduates," Marans said in an e-mail.

Business students can still draw relevant skills from an internship at non-profit organizations, says Patricia Rose, director of career services at the University of Pennsylvania.

"There will be opportunities to work with a non-profit on business plans or a branding strategy," Rose says. "I think the experience will be very good, but it will not be banking experience."

Bonuses to keep

Those who were full-time hires by Bear Stearns are also more likely to be retained by JPMorgan if the division they were to work for at Bear Stearns doesn't overlap JPMorgan's operations. Those whom the company can't take on can still keep their signing and relocation bonus and access to JPMorgan's career services for one year, Marchiony says.

University of Pennsylvania senior Yashoda Khandkar was hired to work full time for Bear Stearns upon graduation next month, a direct result of her internship last summer in its investment banking department, she says. That offer was rescinded on April 2.

Much of the full-time recruiting for financial firms is completed in the fall, leaving Khandkar in a difficult position. She would like to stay in investment banking, but the skills she learned in her internship could benefit her in a variety of jobs.

"When you work in such a specific part of a bank, you learn the skills you need to be successful there," she says. "That will be useful for me wherever I am."

For students struggling to find jobs in investment banking, corporate finance positions provide an alternative, particularly in the health and technology fields, says Al Cotrone, director of career development and student affairs at the University of Michigan's Stephen M. Ross School of Business. The best barometer of job prospects in financial services will come at the end of the summer, when firms offer their best interns jobs after graduation, says Patrick Perrella, senior associate director of MBA career development at Notre Dame's Mendoza College of Business.

"If students don't come back with offers in their back pocket, we'll know the firms are being very, very cautious in their economic outlook," he says.