Bankers braced for new wave of job cuts - but annual bonuses will escape the axe
Friday, 19 October 2001
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Bankers in the City of London were bracing themselves for a fresh wave of job losses yesterday after Merrill Lynch, the world's largest stockbroker, said it was accelerating a cost-cutting programme that has seen the loss of 2,300 jobs in the last three months.
Bankers in the City of London were bracing themselves for a fresh wave of job losses yesterday after Merrill Lynch, the world's largest stockbroker, said it was accelerating a cost-cutting programme that has seen the loss of 2,300 jobs in the last three months.
Merrill Lynch, known as the Thundering Herd after its distinctive bull logo, said the dent to business confidence and the temporary closure of the US stock market after the terrorist atrocities had aggravated the 13-month downturn in mergers and stock trading. The company lost offices in the World Trade Centre, and has spent $53m (£36.6m) relocating.
US brokerages hired staff aggressively in Britain between 1998 and 2000 as City investors gained an apparently insatiable appetite for mega-mergers and dot.com companies, generating lucrative fees for banks handling deals and flotations.
The prolonged stock market downturn has meant costs now need to be slashed. Some 10,000 jobs worldwide are thought to be at risk at Merrill Lynch after the company's president, Stanley O'Neal, warned that he was looking to achieve a "much leaner cost base". Merrill Lynch employs about 6,000 people in London.
Goldman Sachs has indicated that it plans to shed 500 employees by the end of November, while the rival Wall Street firms Credit Suisse First Boston and JP Morgan Chase have announced 8,000 job losses over the past 10 days.
For all the cost–cutting, the quintessential feature of City life, the annual bonus, will escape the axe. The managing director of investment banking at one City institution, who asked not to be named, said yesterday that cutting bonuses was not an alternative to cutting jobs.
"The best business decision in a downturn is to make sure that you come out of it having kept your best people. You always have to pay to keep them," he said.
