Analyst predictions of a dramatic recovery in UK banking profits in the first half of 2010 are unlikely to see any investment bankers popping champagne corks.

The big five UK banks – HSBC, Barclays, Lloyds, RBS and Standard Chartered – are expected make a combined 10bn in the first half, leading many to point to a remarkable recovery in the sector.

But the majority of this (5.5bn) is expected to come from HSBC; a bank with a relatively small investment bank and one which will continue to focus on Asia going forward.

Looking at the two banks with significant UK investment banking divisions – Barclays and Royal Bank of Scotland – it’s significantly less rosy.

RBS’s GBM division (much like the US banks) looks pretty grim. Revenues will be down 28% quarter on quarter, according to Morgan Stanley analyst estimates, and 30% year on year. This is down to subdued trading and fewer fees across ECM, DCM and IBD.

BarCap analysts are forecasting a 40% quarter on quarter slump in revenues.

What’s more, as the chart below shows, this reduction in revenues could continue all year.

Meanwhile at Barclays, despite predictions of an overall increase of profits to around 3.5bn, BarCap – formerly the engine for growth at the bank – is expected to report a near halving of revenues. The bank has already pointed to tough trading conditions in May and June.

Obviously, all of this shouldn’t come as a great surprise – given the performance of their US and European peers in the second quarter – but it will add to the growing sense of pessimism around job security.

Particularly as RBS is likely to reveal a compensation ratio of 30-35% (compared to 27% last year) and Barclays is predicted to be 38-40% (it was 38% this time in 2009).

BarCap has been busily hiring throughout the last year, while RBS has been replacing the legions of investment bankers leaving its doors and offering guarantees to those in key positions.

The FT has this rather ominous quote from an anonymous headhunter: “We’re looking at another bloodbath in the City come October and November unless things get better.”