More cuts coming

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We've had redundancies round one. Rounds two, three, four, five and six are waiting in the wings.

Financial News has some nasty figures which are likely to encourage anyone who's been arguing that the ramifications of the credit crunch are merely a passing trifle to eat their headgear.

According to the paper, the start of this year has been the worst since 2003: European investment banking revenues are half what they were last year, IPOs are down 90% and M&A activity is down 20%.

The paper also has a few choice comments from senior bankers who are clearly erring on the side of rank pessimism. "I think 2006 and 2007 were exceptional blips in the cycle that have proved to be unsustainable. We are set for a very, very difficult 2008," says one.

None of this is great news for jobs. On this front, we have unearthed a few doomsayers of our own. "Banks are maintaining the overhead at the moment and hoping business levels will pick up, but if that doesn't happen you've got to assume there will some fairly aggressive cost cutting before the end of the second quarter," says Lee Thacker of search firm Silvermine Partners.

"Banks are gauging the markets and if the markets continue to act as they are at the present time you will see further reductions in the quarters to come," echoes Dick Bove, an analyst at Punk Ziegel & Co.

With first-quarter results from US brokerage firms approaching, the Wall Street Journal has highlighted problems at both Goldman Sachs and Lehman Brothers, both of which are, surprise, surprise, making additional cuts.

Lehman's cutting 200 investment banking jobs, according to the New York Times. And Goldman's laying off an abnormally high number of people in this year's annual cull, according to Financial News.

Back to 2005 Part II

Also according to Financial News, Lehman's following our prediction and stress-testing its business in the anticipation that revenues will return to levels last seen in 2005.

If this comes to pass, thousands more redundancies are inevitable. Our research suggests that between the end of 2005 and the end of 2007 US banks increased headcount as follows:

Merrill Lynch: +8,020 (not including brokers)

Morgan Stanley: +8,533

Goldman: +6,899

Lehman: +5,637

Bear Stearns: +2,310

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