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CITY BRACED FOR WAVE OF JOB CUTS

CHOP: Blankfein to axe staff at Goldman's London HQ

Tuesday June 24,2008

By Peter Cunliffe, Deputy City Editor

The City is braced for a new wave of job losses as investment banks step up their cost-cutting in the wake of the credit crunch.

Wall Street giants Goldman Sachs and Citigroup are expected to take the axe to jobs in London as part of worldwide cutbacks.

Speculation about such a move by the two banks emerged yesterday as a report warned that up to 110,000 posts would be lost across the UK’s financial services sector in 2008 and 2009. About 19,000 will go in the City.

Goldman, headed by chief executive Lloyd Blankfein, is said to have already begun trimming staff numbers in its investment banking division, which handles mergers and takeover advice.

An estimated 400 jobs have already gone across the group in the past three months but the next round of cuts is predicted to be more severe. Goldman employs 31,500 people worldwide, including 6,000 in London.

A spokesman declined to comment but earlier this month the firm said market conditions would mean moving staff to growth areas and asking some people to leave.

Citigroup is this week informing staff about 3,000 cuts as part of plans to lay off 6,500 of the 65,000 workers in its investment banking operations. An estimated 1,500 could go in London.

A study by the Centre for Economics and Business Research and recruiter Hay Group predicted 350,000 jobs would be lost across the UK this year and next, including 110,000 in financial services.

Russell Hobby, associate director at Hay, said a third of firms in the sector were planning to reduce employee numbers during the next 18 months.

“It is more than any other sector. Financial services firms react much more quickly to changing conditions by cutting bonuses and jobs,” he said.

“These are lean times and firms want to keep costs down. In this kind of industry the primary cost is people.”