Lehman Brothers Holdings Inc said on Thursday it will fire another 850 workers, or about 3 percent of its work force, as it scales back its mortgage lending efforts globally.

Lehman, the fourth-largest investment bank in the United States by market cap, said it will trim its U.S. and U.K. home loan operations and close its South Korean mortgage business.

The moves will result in costs of $20 million after taxes, Lehman said.

Two weeks ago, the investment bank said it would fire 1,200 workers as it shuttered its U.S. subprime mortgage lender, which followed a June announcement that it was cutting 400 U.S. subprime jobs.

There have been several rounds of layoffs across the industry. Lehman may cut more -- it depends on whether they've cut enough to match the demand, because demand is weaker now, said Cheryl Hua, senior analyst at Profit Investment Management, which holds Lehman shares.

Lehman's laying off workers is a sign that revenue from its mortgage business may not come back as soon as previously hoped, analysts said. The company's shares fell 1 percent to close at $53.83 on the New York Stock Exchange.

Lehman, one of the largest underwriters and traders of mortgage debt on Wall Street, was one of the first investment banks to make home loans itself and package them into bonds. The investment bank planned to export that business globally.

But the mortgage business has proven more difficult than expected as big homeowner defaults have made investors worldwide leery of mortgages packaged into bonds. Lenders have broadly been taking hits from growing defaults amid an extended U.S. housing slump.

National City Corp said on Thursday it expected to take $200 million of charges and unusual items, before taxes, in its mortgage banking business in the third quarter.

Lehman shares trade at about 1.4 times their book value, which is low by historical standards.

An awful lot of value investors are sniffing around Lehman, but they want to wait until they are certain there won't be a catastrophe when earnings are announced, said Brad Hintz, analyst at Sanford C. Bernstein in New York.

In addition to difficulties in the mortgage business, Lehman has provided loans for leveraged buyout deals. The investment bank had planned to shift that risk to other parties, but given turmoil in the junk bond market, it's not clear if it will be, potentially resulting in write-downs.

Lehman's shares have fallen 31 percent this year, performing far worse than the broader sector, as measured by the Amex Securities Broker Dealer index, which has fallen more than 8 percent.