Goldman to shed 800 by Christmas

Goldman Sachs is on the brink of cutting at least 800 investment banking staff from its European operations in its continuing efforts to drive down costs.

The well-heeled US bank, which tends to maintain a far lower media profile than its Wall Street rivals, is expected to carry out the cuts before the end of the year, contributing to a financial sector "bloodbath" predicted by some observers. The bank has been suffering, along with the rest of the industry, from the general market slump and particularly from the sharp collapse in global merger and acquisition activity.

In a recent admission to banking analysts, the group's chief financial officer, David Viniar, said that the size of Goldman's staff would "continue to trend downwards". Analysts who asked not to be named said that they clearly interpreted this statement as implying at least a 4 per cent cut in group staffing levels. Such a cut would be broadly in line with measures taken by other banks.

Sources at Goldman Sach's London office also confirmed the strong suggestion that the US management would be directing the job cuts at its City and Continental operations: "I feel pretty sure we're in the firing line," said one corporate financier. "When they batten down the hatches, London is always a nervous place."

Goldman Sachs is not the only bank where rumours of further job cuts abound. Although Merrill Lynch has already undertaken huge staff cuts, some believe that its investment banking division may be in line for yet more thinning. Citigroup is also thought to be planning to fire more than 1,000 employees in its corporate finance department.