High-Flyers Facing Axe as Fearful City Tries to Cut Costs; New Uncertainty in Financial Markets Puts Thousands of Jobs on the Line

By Hosking, Patrick | The Evening Standard (London, England), June 10, 2002 | Go to article overview

High-Flyers Facing Axe as Fearful City Tries to Cut Costs; New Uncertainty in Financial Markets Puts Thousands of Jobs on the Line


Hosking, Patrick, The Evening Standard (London, England)


Byline: PATRICK HOSKING

THOUSANDS of the highest-paid workers in London are braced to lose their jobs in the next few weeks as the City's big investment banks wield the axe with renewed vigour.

Traders, analysts and deal-makers fear a new wave of cuts because of the suddenly worsening outlook for financial markets.

Some employers have put off job cuts in the hope of a share market rally.

But last week's plunge in the FTSE 100 index of blue-chip companies below the symbolic 5000 level has concentrated minds.

Many believe they cannot justify keeping people on the payroll who earn anything from [pound]100,000 to [pound]5 million a year when the City is heading for its quietest summer in a decade.

"There's a big cull coming across the City," said one investment banker.

"The senior managers have been told to come up with more cost cuts."

While in the past the banks cut junior staff, this time some of the more senior heads will roll.

Formal suits are back in, casual clothes have been dumped, and everyone is trying to look as busy as they can as the also-rans are separated from the "rainmakers" - the dwindling few still bringing in income.

In the firing line this time are the socalled "industry group specialists", experts who follow specific sectors like telecoms and must bring in huge fees from clients. The best of these can be on packages of $5-$10 million a year.

Imminent cuts are expected at American-owned Schroder Salomon Smith Barney and two of Germany's biggest banks, Deutsche Bank and West LB.

SSSB, part of Citigroup, is expected to lay off up to 10 per cent of its 800 investment banking staff, possibly as early as this week, in a second swathe of cuts. Last November it shed about five per cent of its employees.

Deutsche Bank is expected to sack hundreds of London staff over the next few weeks in order to help achieve cost savings of e2 billion ([pound]1.3 billion) ordered by its Frankfurt HQ.

West LB, the bank financing the new Wembley stadium, has confirmed it is poised to make cuts. About 15 to 20 per cent of its 750 UK staff are likely to go.

Virtually every investment bank has been quietly shedding staff over the past 12 months.

The Centre for Economics and Business Research has forecast City job losses of 20,000 this year. …

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