Lehman Brothers plans to close its subprime mortgage unit, BNC Mortgage, shedding 1,200 jobs.

The bank said it would take a charge against earnings of about $52m (£26m), representing goodwill associated with BNC and severance, property and technology costs.

Lehman is to stop packaging subprime mortgages into securities to sell to investors.

It will continue to originate mortgages through its Aurora Loan Services platform andwill be able to issue subprime loans through Aurora if the subprime market improves.