Bankers warn of 'swingeing' cuts

GLOOM surrounds investment banking, with fears of further job cuts on the way. A report by Schroder Salomon Smith Barney says global merger and acquisition activity fell sharply in February to a six-year low. Equity underwriting was down 50% in the US and 70% outside the US.

The report, in this week's Financial News, says bond markets are down 15% in the US, 3% in Europe and up to 50% in areas such as securitisation. Six months after the September 11 terrorist attacks battered already fragile financial markets, many bankers are pessimistic.

They think last year's redundancies, amounting to 60,000 jobs throughout the industry, may not have been enough. They say the length of the industry downturn has been underestimated.

One senior corporate financier at a German investment bank said: 'Revenues are low and there's not much sign of an upturn. There are going to be cuts and they're going to be swingeing ones.'

Areas where staff face cutbacks are media, communications and technology, according to one senior banker at Goldman Sachs. He fears there would be more widespread reductions at Goldman, due to cut more than 1,000 jobs this year.

Credit Suisse First Boston is also expected to make redundancies, with more selective cuts possible at JP Morgan, Merrill Lynch and Morgan Stanley.