4,000 City jobs axed as Lehman folds

Staff were clearing their desks at the Canary Wharf headquarters of Lehman Brothers. Another 1,000 jobs at the bank's offices in High Wycombe are also in doubt.

Meanwhile, America's biggest insurance group and Manchester United sponsor, AIG, became the latest financial giant to teeter when its shares almost halved at the start of trading in New York. It has a UK workforce of 3,000.

Senior Lehman Brothers staff in London were told late last night that efforts to save it had failed. They passed the news on to their teams at 8.30 this morning. Shocked workers began to emerge shortly afterwards, not knowing whether they will be paid this month. Many were clutching boxes of belongings, some carrying cases of vintage wine. Headhunters set up makeshift recruitment offices in coffee shops in Canary Wharf as hundreds of jobless bankers began the search for work. Investment banker Koen Thijssen, 23, was one of the first to leave the HQ. He said all staff were now clearing their belongings from the building, adding: "The company has ceased to exist so there is not much to say."

Kirsty McCluskey, 32, who worked on the trading floor, said: "It is terrible. Death. It's like a massive earthquake. It's final. Everybody is just finishing up."

The 32-year-old from Canada Water said staff were filling in expenses before removing their property from desks.

The collapse means everyone entitled to a bonus, some of at least £1million, will now get nothing.

A fitness instructor who ran a class at the bank told how distressed employees were drowning their sorrows in the staff canteen.

Sphinx Patterson, 35, said numerous staff were drinking beer in the canteen on the seventh floor of the Canary Wharf skyscraper. He said: "People are walking around in shock. Girls are crying, blokes hugging each other. People don't know what to do." Mr Patterson, from Willesden, who was told his classes had been cancelled, added: "It's not just the high-fliers who are losing their jobs. I spoke to a receptionist and she was packing up her pens."

Trush Patel, 25, who works in finance, said others were in the canteen using up the last of their credit on their canteen cards.

Frenchman Edouard d'Archimbaud, 24, was due to begin his first day as a £45,000-a-year trader at Lehman Brothers today. He said: "I had trouble getting here because of the Eurostar fire. When I finally made it I found out I was fired. We are all fired."

Marion Guilbert, 36, also from France, who has worked in sales for seven years at Lehman Brothers, is expecting twins in two months.

She said: "It is very emotional and even more emotional for a pregnant woman. But at least I have something to look forward to."

Graduate trainee Jack Reynolds, who has been at the company for just one week, left the building carrying a Lehman Brothers umbrella and rugby ball.

He said: "My career has been halted at the first hurdle. Everyone is upset and down but they've just got to get on with it."

John Collins, 40, who worked in equity derivatives product control, said he was told not to come back tomorrow. "People are just trying to come to terms with the shock of it."

Angry staff blamed chairman and chief executive officer Richard Fuld for the collapse, citing failed discussions to sell last week as the cause.

A trader, who would not give his name, said: "I would have made one million dollars this year so I don't give a stuff about a month's wages. The bank should have been sold last week but they were holding out for more money. It is the CEO's fault."