Wanted: 104,000 new jobs

Why is an investment banker like an Alt-A mortgage? No, it is not a joke - or at least, not for the thousands of bankers, traders and other financial professionals who are about to be out of a job. But the wave of cuts brought on by the collapse of Lehman Brothers and the associated woes of its peers bears some similarities to the dud securities banks have been dumping since the credit crunch began.

It is hard to tell how many industry staffers will find themselves jobless, but here is a rough estimate after the early part of this week's mayhem. Lehman had a headcount of about 26,000 as it collapsed. Bank of America has not said how many staff it will cut after gobbling up Merrill Lynch, but it looks to be aiming at around 10 per cent of combined costs. Apply that to their headcount, too, and it suggests a cull of a further 26,000. That is 52,000 jobs canned from Mad Monday alone.

Yet even before this week, Wall Street and London's square mile were paved with redundancy notices. Banks are often cagey about the real figures, but it looks like 14,000 jobs have been rubbed out this year at Citigroup, 9,000 at Unicredit, 7,000 each at Wachovia and UBS, 4,000 each at JPMorgan, National City and Morgan Stanley and roughly 1,500 each at Goldman Sachs and Credit Suisse. That takes the total to 104,000.

Like Alt-A mortgages trading for 30 cents on the dollar, it should not be a surprise to see formerly flush financiers taking similarly short haircuts to their earnings.