The bankers who are living on borrowed time

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The numbers, which reveal the true extent of the slowdown in important areas of investment banks' business, will raise fears about job cuts in investment banking.

The picture is equally gloomy in parts of the equities business, where activity has also slowed to a trickle.

According to figures compiled by Thomson Financial, the volume of M&A deals in the first two months of this year fell from $818bn (€879.31bn) a year ago to $309.6bn.

In three months to the end of February - the period which covers the first quarter for both the market leaders, Goldman Sachs and Morgan Stanley Dean Witter - global M&A volumes fell 52.5%.

The principal cause for the decline is fear about the US economic slowdown and the impact on other economies.

At the same time, activity in the two industries which drove investment banking business most strongly last year - telecoms and technology - has all but dried up.

Goldman is cutting 650 jobs worldwide but this only a slightly more aggressive thinning out than the one it undertakes every year. Bear Stearns is laying off 400 people.

Credit Suisse First Boston this week started axing about 300 investment bankers worldwide, just under half in Europe. It blames the cuts on its acquisition of Donaldson Lufkin & Jenrette.

The banking axe could still fall much more heavily and the worst hit area could be the US, where business has been far worse than in Europe.