London jobs face axe from US banks

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Key to the cutbacks will be tomorrow's bonus day at Goldman Sachs, where bankers are to share a record $18 billion (£8.8 billion) bonanza thanks to the bank's success in steering clear of much of the subprime mortgage crisis. Next week, arch-rival Morgan Stanley will announce bonuses, with Bear Stearns and Lehman Brothers soon after.

Fearing an exodus of their top rainmakers to Goldman or other banks and hedge funds, they will be working hard to match, or at least come close to, the Goldman payouts. For many junior staffers that can only mean one thing: P45s.

The jobs toll from the credit crunch is already picking up pace, with news today that Canadian bank CIBC is axeing 60 staff and closing its leveraged finance operation. Dresdner Kleinwort plans to cut more than 60 London staff. UBS is slashing scores of workers from its Broadgate investment banking base.

CIBC employees, who total about 450 in London, fear the redundancies could leave the bank with as few as 100 front-office employees. At least 60 bankers have already been laid off or are in discussions with the bank about their positions.

Dresdner is said to be discussing measures that could see bankers restricted in their spending on travel and entertainment as part of a costcutting programme designed to save as much as £144 million.

Cost controls thought to be under consideration include limiting taxi use, monitoring mobile phone bills, and banning all but the most senior employees from staying in five-star hotels or flying business class.