The City is braced for another massive round of job cuts as investment banks accelerate their cost-cutting in the face of credit-crunch losses.

Goldman Sachs and Citigroup are eliminating thousands of jobs worldwide, with both set to cut their headcount by up to 10% in some divisions.

Goldman, which has fared much better than most of its rivals through the credit crunch, has already started laying off experienced bankers in its mergers and acquisitions and corporate fund-raising departments. The cuts come on top of Goldman's annual cull of the 5% of staff it deems to be the worst performing.

The bank has reduced its headcount by 400 between the first and second quarters of this year but the latest round of job cuts is likely to be far more severe.

Citigroup is set to start firings as early as today, with a reported 6500 of its 65,000 investment banking employees likely to get their marching orders.

The Wall Street-based bank has lost $15 billion (£7.6 billion) through subprime and credit crunch write-offs since last summer and is expected to have made further big losses in the second quarter of this year.

A spokesman did not confirm the layoffsbut said: "Citi indicated this year that it would be resizing this business in response to market conditions and as part of our re-engineering efforts."

Citi said in April that it would cut 9000 jobs on top of the 21,000 it had eliminated in the previous year.

Like Goldman, Citi is expected to make deep cuts in its mergers and acquisitions division where the number of scale of deals and flotations has been running at much lower levels than

in recent years. But it is also forecast that trading desks may be removed in London and New York with senior executives likely to lose their jobs.

The cuts are the first big move by John Havens, right-hand man to Citi chief executive Vikram Pandit, who took over the bank's institutional client group earlier this year.

Industry analysts say that the summer's round of blood-letting will be much more severe than many people had expected because up until now investment banks have resisted firing too many staff in the hope that business would pick up again.

What cuts there have been have centred on fixed-income bankers who were largely responsible for credit crunch losses. But second-quarter results last week from Lehman Brothers, Goldman and Morgan Stanley show that the credit crisis is spreading further across banking divisions.

SWINGING THE AXE
London's credit-crunch job cuts:

Citigroup - 1500
UBS - 500
Bear Stearns - 800
Merrill Lynch - 600
RBS/ABN - 500
Morgan Stanley - 400
LEhman Bros - 400
Goldman Sachs - 450
Dresdner Kleinwort - 200
Credit Suisse - 200
Bank of America - 180
Deutsche Bank - 150
JPMorgan - 150

Source: company filings, Evening Standard estimates