City braces as Germans swing axe

THOUSANDS of UK banking jobs are in danger as the giant Deutsche Bank prepares for a fresh attempt to cut costs.

The threat comes on top of the 14,500 jobs it has already said must go in Germany, Britain and the US. The front-line deal-makers and traders are safe. The targets in the latest round are administrative and support staff.

The bank is in talks with several companies about contracting out the management of some of its UK back-office operations. It has already struck a deal with a property management company to run all its buildings around the world.

Deutsche Bank, the biggest financial company in Germany, employs about 12,000 people in Britain, most in the City. Up to 60% are involved in some type of back-office work. Sources said it would like to contract out all its back-office operations, which could put about 6,000 jobs at risk. But an executive said: 'There are some areas where it wouldn't work.'

The bank, led by new chief executive Josef Ackermann, unveiled net earnings for the first quarter of £129m - a 76% fall on the same period last year. Like its UK counterpart, Barclays, Deutsche Bank substantially increased its bad debt provisions to £322m.

Meanwhile, the City has been the hardest hit by US investment bank Morgan Stanley's latest redundancies. Eighty of the 150 investment bankers shown the door by Morgan Stanley last week worked at its Canary Wharf offices in London's Docklands.

The cuts, the third round of redundancies at Morgan Stanley in 15 months, involved some of the US investment bank's highest-paid staff, including managing directors earning up to £1m a year. An insider said: 'They were given just two hours to clear their desks. The atmosphere was terrible. People were very upset - one guy was crying.'

The other cuts were at Morgan Stanley's New York HQ and at its European offices. Though the sackings were described as being across the board, back-office support staff seem to have escaped. Only last week, Morgan Stanley denied it had any redundancy plans.

About 36,000 financial services jobs were lost in the UK in the second quarter of this year as markets plunged and fee-generating corporate activity dried up, according to the Office of National Statistics. The cuts are having a knock-on effect among the small businesses, from jewellers to restaurants, that serve City workers.