Bear Stearns is to tighten risk controls at its asset management division to mitigate against a repeat of the recent near collapse of two hedge funds under the weight of heavy losses, it has been reported.
In order to centralise control of the unit and bring it under the closer scrutiny of the bank a number of new measures will be introduced, according to the Wall Street Journal.
Chief among these will be making the unit report to the bank's chief risk officer Michael Alix, instead of the chairman and chief executive of the division.
Meanwhile, the number of risk managers affiliated to the unit is to be increased.
News of the Bear's moves comes after it last month replaced Richard Marin with Jeffrey B Lane as head of the asset management division in an attempt to limit the damage done to the firm's reputation.
Bear has earmarked $1.6 billion to rescue the High Grade Structured Fund Credit Leveraged Fund, while the High Grade Structured Credit Strategies Fund is to be wound down.
Both funds have posted crippling losses resulting from bad bets on risky mortgages.