But even as heads rolled last year, there were glimpses of a more considered approach to the problem of having too many staff. Salary freezes, renouncing the right to guaranteed bonuses, hiring freezes, voluntary redundancies and even sabbaticals, were tried out as methods of preserving precious talent until conditions improve.
None has been as innovative in its pursuit of alternative strategies as Merrill Lynch. Having made widespread compulsory redundancies in 1998, the US bank then increased staff numbers by 10%. Wanting to cut back again last year, it chose a different method - sending e-mails to more than 50,000 staff in November, inviting them to apply for voluntary redundancy. About 2,600 took up the offer.
Bankers at Merrill say the generosity of its terms made the offer particularly appealing. Volunteers received between 12 and 54 weeks' pay and 40% of the record bonuses paid out in 2000.
Many were also able to escape with share options intact, thereby tempting long-servers for whom a departure under normal circumstances would have meant losing the right to options potentially worth millions of dollars.
Several big fish in Europe took the bait. Phyllis Rock, head of HR Michael Weber, head of structured products Kevin Horgan, head of convertible sales Andy Jennings, co-head of equity derivatives stock trading and Nick Salter in MLIM's TMT division, all made for the exit. Merrill Lynch was not alone in cajoling staff out of the door. Goldman Sachs induced a number of its human resources staff to leave by similar methods.
Other banks cut costs by different routes. At Credit Suisse First Boston, attempts by new chief executive John Mack to shave $1bn (€1.1bn) from operating costs led to a stark appeal to certain staff, amounting to: 'Give up the guaranteed bonuses for the good of the firm, or else.'
This apparently successful technique has been emulated elsewhere. Rupert Channing of the search firm Heidrick & Struggles says: 'Every single institution has asked individuals to reconsider their guarantees.' Channing says that many decided to accept reductions.
Nevertheless, communal spirit in investment banks appears weak compared with that in corporates.
In a survey by Accountancy Age magazine, 40% of financial directors said they would work without pay if it meant saving the company.
In the absence of similar magnanimity, CSFB plans to sack more staff. The CEBR research organisation, which tracks employment in financial services and related professions in the City of London, estimates that 17,000 jobs will have been lost by the time the current downturn ends. Research by Financial News shows that at least 60,00 people in banking and securities worldwide lost their jobs last year.
Banks have been here before. During the downturn between 1989 and 1992, the CEBR says that 40,000 jobs were lost in the City of London. About 3,500 jobs went at Merrill Lynch in 1998.
But for some firms, redundancies are not an imperative. Until recently, Cazenove, one of the few remaining privately owned partnerships, had avoided making redundancies through its entire 178-year history.
Goldman Sachs was once similarly benign. One headhunter says: 'When Goldmans was a partnership, people weren't asked to leave, they were moved sideways or menaced out with low bonuses.'
Unwillingness to make redundancies may be no bad thing. Crawford Gillies, European managing director at the Bain consultancy, says: 'Once again banks seem to be forgetting that investment banking is a cyclical business. For a while they were talking about the lessons of the last downturn, and how Merrill Lynch had made a big mistake by letting people go and then expensively rehiring. But now the same mistakes are being made again.'
Gillies says that banks should instead identify a top third of highest performers that they do not want to lose at any cost, a bottom third of dispensable underperformers, and a middle third of mediocre types, for whom creative options are most appropriate.
It is these mid-ranking performers that have the most to gain from temporary solutions such as a leave of absence or a secondment to a client, both policies used by Bain itself. Accenture has also been creative in this area. About 4% of its consulting staff have taken a six- to 12-month sabbatical on one-fifth of their pay.
Tim Robinson, Accenture's head of human resources for the UK and Ireland, says that the programme is better than forced redundancies. 'This way we don't lose our investment in training and developing employees.
'Not only can we can achieve our business objectives in terms of managing head count, we can also give our people the opportunity to do something completely different for a while.'
Another option is simply to freeze salaries, as both Merrill Lynch and Morgan Stanley have done in recent months. Pay consultants say other banks are thinking of following suit.
In investment banking, the most innovative techniques for reducing employee costs appear to have been reserved for the back office and for graduates.
Gavin Bonnet, managing director of Alexander Mann Global Markets, says that BNP Paribas and CSFB have asked contractors to reduce working hours by 10%.
Similarly, both Citigroup and CSFB have given graduate entrants the opportunity of taking an additional year off, at a fraction of normal salary.
The day may come when underemployed bankers will be invited to travel the world while markets recover. Until then, it is worth remembering that although redundancies are painful, some people benefit from them, particularly at bonus time.
James Bridgman, director at the search firm Pelham International, says: 'Banks that haven't made redundancies are going to have to spread bonuses very thinly. This could irritate a lot of senior people.'