"The knock-on effect from Asia will be seismic for the City," said Patrick Field, managing director of City head-hunting firm Hanover. "Asian and Japanese houses are very cost-conscious and they'll pull the plug quickly. They tend not to see out a downturn, unlike British banks." Higher-paid workers such as traders and salesmen will be the most vulnerable to the Asia-driven redundancies, Field predicted.
Job losses because of events in Asia will compound growing employment insecurity in the City caused by a wave of mergers in the banking and financial services industry. The merger between Union Banque of Switzerland and SBC Warburg, announced before Christmas, is expected to see 3,000 sackings.
Up to 500 jobs have already disappeared as a result of the turmoil. These include 350 at the London arm of Yamaichi, the Japanese stockbroker that went bankrupt last November. A handful of jobs have gone at BZW's London offices. Over 100 staff at the London operations of Peregrine Securities, the bust Hong Kong broker, are biting their nails as receivers try to find a buyer for the company.
South East Asian banks - those in the tiger economies of Indonesia, Thailand and Singapore - employ over 3,000 staff in London, while Japanese banks and brokers are estimated to have over another 10,000 staff. In total, 15,000 of the 250,000 people who work in the City depend on Asian markets.
"It's tough out there," said one recently sacked City whiz-kid. He expects 2,500 staff to be moved on by the middle of this year in London. Less than 20 per cent can hope to find another job in the market again.
Over the past five years, the City has made a fortune out of Asia, a boom now viciously brought to a halt. A good Asian trader in London would be expecting to earn anything up to pounds 100,000 with bonuses pushing his final salary up to pounds 250,000 in a good year. Even salesmen of medium rank can expect to make over pounds 100,000. While most of those made redundant will have a pay-off, many will have to scale back lavish lifestyles. That may take the froth off London's booming property market.
The pain felt in London is still nothing compared to what bankers in Asia are experiencing. On Friday, the Hong Kong Securities and Futures Commission put 18 stockbrokers in the territory on a watchlist. In Asia British investment bank Schroders sacked 200 staff while the French-owned SocGen-Crosby Securities has also made large cuts, rumoured to be about 100. At Peregrine, the collapsed Hong Kong investment bank, some 1,400 jobs have gone. BZW's Asian equities business, being sold to Credit Suisse First Boston, has sacked 175 workers and the final number will be much higher.
Anthony Cook, a senior consultant at head-hunter Morgan & Banks, points out that competition among sacked City workers for jobs will be exacerbated by expatriates returning from Hong Kong and Singapore.
One analyst from Malaysia has booked in to see London-based head hunters. He is pessimistic about the future and is looking for work in other emerging markets, like central Europe. "The way things are going, it looks bad wherever you look," he said.