KPMG sacks 670 employees by e-mail

The City was again gripped with fear about impending job cuts as a number of major investment banks prepared to make more staff redundant.

In addition KPMG, one of the Big Five accountancy firms, made nearly 670 staff redundant via e-mail. The firm sent the e-mails on 2 September to the staff who had been earmarked for redundancy.

A spokesperson said: "Management did not do this on a whim. It was after a lengthy consultation process and employees said they preferred being told immediately by e-mail than being called in one by one."

Credit Suisse First Boston is expected to axe 90 investment banking staff in its London office this week as part of a drive to cut about 400 investment banking staff globally.

This round of job losses is part of CSFB's plan, announced in the summer, to reduce its global workforce by between 5 and 7 per cent, or about 1,7500 jobs.

Separately, Henry Paulson, the chairman of Goldman Sachs, indicated the bank would slash more staff. Mr Paulson told France's La Tribune newspaper: "In spite of job cuts, the industry is still suffering from overcapacity. We must continue to look at our costs by both business sector and geographical area."

Goldman had warned that headcount would continue to fall due to the continued downturn of the equity markets and lack of mergers and acquisition work for investment bankers.

The major investment banks have cut 65,400 jobs in the past year and a half in response to plummeting M&A and IPO fees. Other financial institutions have also felt the pinch.

Merrill Lynch was also the subject of speculation. It said "the bulk of staff reductions are behind us" but added that the bank "may reduce headcount in some areas".