UPDATE 2-Lehman cutting 5 pct of work force - source

(Adds comment, background on Lehman, byline)

By Jonathan Stempel

NEW YORK, March 10 (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research), the Wall Street investment bank, is laying off 5 percent of its work force, or about 1,430 people, because of difficult market conditions, a person briefed on the matter said on Monday.

The cuts are being made across all divisions and regions, and employees affected are being notified on Monday, the person said.

Lehman employed about 28,600 people as of Nov. 30, 2007, according to the company's most recent annual report.

The bank declined to comment.

Before Monday, Lehman had eliminated close to 4,000 jobs in the last year. Many were in mortgage operations, which have been hurt by the nation's housing slump. Lehman is the largest underwriter of U.S. mortgage bonds, Thomson Financial said.

"There's a structural imbalance in the financial services industry," said Michael Poulos, head of financial services in North America at Oliver Wyman, a consulting unit of Marsh & McLennan Cos (MMC.N: Quote, Profile, Research). "Most businesses are built for more volume and higher margins than exist today, and which are likely to exist for the next 12 months or more."

Lenders worldwide have suffered well over $160 billion of write-downs as tight credit market conditions caused losses tied to mortgages and other risky debt.