Dresdner Kleinwort to axe 125 London staff

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Stefan Jentzsch, the Dresdner Kleinwort chief executive, is to axe up to 5 per cent of the investment bank's London-based 2,500 staff by the end of the week - but will sweeten the pill by paying bonuses early.

The job losses, which will affect up to 125 staff across the operation's divisions, are part of its annual performance review. They will affect all grades of staff and all departments. Similar exercises are being carried out at the bank's other centres in what sources called a "global exercise".

Dresdner Kleinwort had said in June that it was planning job cuts as part of a cost-cutting drive to reduce its high cost-income ratio, which reached 90 per cent in 2005.

The atmosphere at the bank is thought to have been strained due to the cuts, which focus on individuals judged to have been performing poorly during the previous year. However, the early bonus payments are likely to smooth ruffled feathers among staff, particularly given that the bank has traditionally been one of the latest payers in the Square Mile.

Previously staff were informed about bonus levels in February ahead of payment in March. However, this year they will be told what they will be getting before Christmas, with payments early in the new year.

The job cuts and bonus change are being seen as a way for Mr Jentzsch, appointed last November, to impose his authority on the company. He has been pushing through a restructuring and a cost-cutting drive as part of his aim to double revenues in three to five years. In June the bank cut 300 investment banking jobs and later closed its proprietary trading desk.

A spokeswoman for Dresdner Kleinwort confirmed that the "performance review" was in progress, but declined to give details.

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