City jobs at risk

by Gill Montia

Story link: City jobs at risk

Rumours of job cuts in the City are gaining ground with the news that some of the large banks are freezing recruitment.

US banks, including Bear Stearns and Lehman Brothers, are reported to be reducing staff by over 2,000 as a direct result of the US sub-prime mortgage crisis.

At the same time recruitment specialists are warning that they expect to see job losses in debt-related and mortgage departments.

Some expect the head count reduction to extend to commercial lending and proprietary trading desks, as well as private equity business.

Meanwhile, the Royal Bank of Scotland’s (RBS) latest report on the London economy suggests that the City’s difficulties of the past two months could be having a wider effect on commercial confidence.

RBS quotes its purchasing managers’ index, which shows activity growth at its lowest since October 2005.

The report attributes this to a marked downturn in new business expansion in the Capital, highlighting the fact that while activity growth in London is at its lowest in almost two years, the rate of expansion across the UK as a whole stands at a 14-month high.

Banks are under renewed pressure this week as around £70 billion of short-term money-market loans are due to mature between now and mid-September.

In addition, Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns will begin reporting their quarterly results next week and these are expected to reflect heavy paper losses.