Bankers brace for fresh jobs cull

INVESTMENT banking business worldwide has collapsed to its lowest level for six years. Merger and acquisition volumes slumped to £191bn in the March quarter, according to research group Dealogic.

By value, deals were down 45% from a year ago, itself hardly a boom period. The number of deals fell by more than a fifth. These were the lowest levels since the first quarter of 1996.

The news came as John Mack 'the Knife' laid off another 300 bankers at CSFB, including 50 managing directors. 'These people are too expensive and the business just isn't there,' says a City source. 'There's still a big shake-out coming at a lot of firms. People are hoping deals will pick up again later in the year.'

CSFB came fifth in the league table of City advisers last quarter. Morgan Stanley topped the table, just edging out Deutsche Bank.

Shielding the City from some of the downturn, UK companies attracted more bid money from overseas than those in any other country. Foreign bidders spent £11.4bn buying UK groups, 6% more than was spent on their US rivals.

Including domestic deals, Britain accounted for £20bn worth of takeovers during the period - or 10% of the world's total. European deal volumes fell just 26%, compared to 59% in the US and 42% in Asia.

The decline is much worse for investment bankers than for their clients, since the majority of takeovers destroy value. Demergers and spin-offs, which are usually much better for shareholders, declined less rapidly than bids. They accounted for half of all deals in the quarter, up from one-third two years ago.