Goldman and CSFB wielding axe

THE City was braced for a fresh round of blood-letting today as Goldman Sachs and Credit Suisse First Boston admitted that they would soon be axing more staff. Goldman is conducting a strategic business review, likely to be concluded ahead of the group's first-quarter figures next week. It is expected to recommend that between 1,500 and 2,000 staff are made redundant, equivalent to up to 10% of the global workforce.

Credit Suisse Group, meanwhile, delivered a grim prediction for 2002, warning that its investment banking subsidiary Credit Suisse First Boston would take less money this year than last and that the rest of the business would show no improvement.

CSFB chief executive John Mack admitted there will be more job losses in the coming months, after the firm shrank by 2,500 people last year. 'I am confident that we will be taking more heads out in investment banking,' he said. It is understood that the firm is focusing on bankers at a senior level, who routinely take home more than £1m a year.

Fellow Swiss bank UBS Warburg said that about 40 graduate trainees will not be kept on when their two-year training programme ends this summer. The firm said this did not reflect business conditions, but recruitment consultants confirmed that City banks are not retaining young bankers in an attempt to reduce staff numbers.

Investment banks were widely expecting an immediate pick-up in business activity in 2002. They have been bitterly disappointed so far and are reviewing ways to cut costs. JP Morgan Chase is looking at personnel reductions, having already axed thousands of employees last year.

'We have made no decisions but if revenues do not pick up, jobs will have to go. We are not alone though. Everyone is in the same mindset,' said one source.

The City lost at least 20,000 staff last year, and 60,000 investment bankers were laid off here and on Wall Street. CSFB was one of the more aggressive cutters but group chairman Lukas Muhlemann today unveiled a slump in profits of more than 70% last year to Swfr1.6bn(£671m), mainly because of problems at its investment banking division.

'Credit Suisse Group remains cautious in its outlook for 2002 and expects revenue levels at CSFB to be lower than in 2001,' said Muhlemann. The firm cut bonuses by an average of 49%.