THE CITY faces a jobs bloodbath as investment banks accelerate job cuts to a speed last seen during the 2008 financial crisis.

With data showing UK joblessness at a 15-year high, one of Canary Wharf’s biggest employers, Citigroup, confirmed plans to slash jobs, with 3,000 expected to go globally. BNP Paribas also said it would cut 1,396, or seven per cent, of its investment bankers.

Recruiters and industry analysts agree that they are seeing jobs carnage on a level not seen for three years as the debt crisis and a growing pile of regulations have caused economic activity to plunge.

The thousands of job cuts seen thus far could just be the tip of the iceberg, as banks have to cope with vanishing revenues, higher fixed costs due to pay regulation and the need to build up their capital bases.

A report by research firm Coalition says that investment banks are currently undoing all of the over-optimistic hiring done since the 2008 crash and forecasts that headcounts will be below 2009 levels by next year.

“The decline in headcount is forecast to accelerate in the last quarter of 2011, returning to 2008 levels,” the study says, with fixed income likely to be hardest hit due to “deteriorating performance and challenging capital requirements”.

The research shows that when revenues per head in fixed income, commodities and currencies (FICC) divisions shot up in 2009, many banks went on hiring sprees.

But thereafter, activity declined and costs ballooned so that revenues generated per head in FICC are forecast to drop by 46 per cent this year compared to 2009.

In equities, many of the cuts have already happened. “Banks are scaling back operations in developed and mature markets, while hiring selectively in emerging markets where higher growth is expected,” the study says.

City recruiters agree with the bleak assessment. Kumaran Surenthirathas, who heads the front office staff division at recruiter Eximius Group, said: “The pace of job cuts we are seeing is accelerating to a pace not seen since the 2008 crisis – and it is likely to only get worse.

“The Eurozone crisis coupled with the fact that regulators are clamping down on the most lucrative activities means the cost of keeping on staff is simply too high.”

Few banks are immune, with the pace of lay-offs being ramped up.

City A.M. understands that staff at Nomura’s London office were being informed of cuts yesterday and today, while UBS is expected to be telling staff before Christmas.

At the London office of HSBC’s investment bank, the cost-savings have fallen most heavily on its European credit business, claiming three of its most senior staff. All have been told they must accept a demotion or leave the bank, and hundreds more jobs are expected to go.