Merrill Lynch axes 4,000 jobs

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US giant Merrill Lynch, one of the main casualties of the sub-prime crisis, said it was axing 4,000 staff in a bid to save hundreds of millions of dollars a year.

There were also reports of 900 London jobs going at Swiss bank UBS, another heavily hit by the collapse in mortgage-backed assets.

As many as 40,000 City job losses have been forecast because of the resulting financial turmoil.

Merrill Lynch said the reduction of 4,000 jobs would be targeted in its investment banking arm and support areas. The bank did not provide a regional breakdown, but many in the affected areas are employed in London.

The job cuts make up about 10% of Merrill's total staff - excluding financial advisers and investment associates - and will save 800 million US dollars (£404 million) a year, the bank added.

Merrill made the announcement after posting a 1.96 billion US dollar (£1 billion) first-quarter loss. The Wall Street bank had already recorded more than 24 billion US dollars (£12.1 billion) of write-downs in previous quarters.

Chief executive John Thain, who took over last year from Stan O'Neal, said the firm had produced solid results in a "difficult market environment" which had worsened as the quarter progressed.

UBS declined to comment on the Evening Standard's reports of being told that 10% of its 9,000 London workforce were being axed.

A spokesman for the bank, which has so far written off 37.5 billion US dollars (£18.9 billion) from US property related assets, said: "We continually review our staff in line with market conditions." An official announcement about headcount is expected from UBS in May.