Investment banks begin job cuts

Earlier this week, analysts at JPMorgan said due to the fallout from the US sub-prime mortgage crisis and the credit squeeze, job losses London’s City financial district could be around 40,000.

Yesterday, Swiss bank UBS announced it is to axe 900 staff at its City headquarters on Liverpool Street. The banking giant is the biggest casualty of the credit squeeze with losses of $37.4 billion (£19 billion).

The 900 staff amounts to 10% of its 9,000-strong London workforce. UBS has set a deadline of 23 June as it wants to make redundancies before it reports third-quarter earnings.

There is speculation that UBS chief executive, Marcel Rohner, wants to cut around 3,000 jobs worldwide at the bank, which employs over 80,000 people.

A source close to the bank said it makes sense to cut in London because wages are so high. UBS declined to comment on the scale of the cuts or whether it would be offering voluntary redundancies.

It is believed the job losses will be across the board in investment banking.

In addition, employees of Citigroup, the world’s biggest bank, are now preparing for job losses. Insiders say the bank is likely to lay off 1,000 London staff when its first quarter results are published today.

Commentator David Buik of BGC Partners said the job cuts were inevitable and more banks will follow suit.

Prime Minister Gordon Brown, who is currently in the US admitted that the world is in quite a big economic downturn.

Mr Brown insisted that the position in Britain was very different from that in the US. We are certainly an economy that is continuing to grow, said Mr Brown. We have relatively low inflation, we have relatively low interest rates and relatively low debt.

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