Merrill Lynch today said it will slash 4000 jobs around the world, representing one out of every 10 of its employees.

Chief executive John Thain is targeting savings of $800 million (£406 million) a year through the firings. But getting rid of 10% of his workforce will cause a one-off hit of around $350 million.

Merrill Lynch employs almost 4500 people in London, the HQ of its European, Middle East and Africa operations. The axe will fall here but perhaps less than in the US where most of the subprime mortgage and related losses occurred.

It is likely that some 300 posts will be chopped in London-based operations, although staff have not yet been informed where the cuts will take place.

Merrill announced its third quarterly loss in row today after it wrote off another $6 billion, including $1.5 billion on asset-backed securities and another $3 billion written off hedges with other financial guarantors.

It also took direct hits in the subprime mortgage market and leveraged finance deals. The firm wrote off $24 billion in the final two quarters of 2007.

This took its first-quarter loss to $1.97 billion compared with profits of $2.03 billion in the first quarter of 2007.

Thain said: "Despite this quarter's loss, Merrill Lynch's underlying businesses produced solid results in difficult markets.

"The firm's $82 billion excess liquidity pool has increased from year-end levels and we remain well capitalised."

Merrill has raised $12.8 billion since the end of last year, with Thain pointing out that it has raised more capital than it has lost so far.