Banks throughout the City have frozen recruitment for middle office jobs as the full force of multi-billion pound writedowns are felt.

Over the past month there have been few or no new posts for risk analysts, financial controllers, audit and treasury experts, in banks such as Barclays Capital, Morgan Stanley, ABN Amro, Bank of America and Citi-group, City sources said.

Bankers working in these areas are also likely to receive minimal or no bonuses. Cash that would normally have gone to mid-office workers will be diverted to senior managing directors in equities or mergers and acquisitions as a way of retaining them and their client relationships.

Emma Halls, director of the City team at Finance Professionals, the recruitment firm, said: “Money is being given to those who are deemed to be a priority. People are feeling very nervous in credit and derivatives. I still expect that the big performers will get a lot of money.”

The Centre for Economics & Business Research has forecast the bonus pool will fall by 16 per cent this year to £7.4 billion. Financiers in particular will be hit, as firms are expected to pay on average, 50 per cent of bonuses in shares. Workers may have to wait up to three years to cash in those shares.

Delivering a fourth quarter trading outlook yesterday, Marcel Ospel, chairman of UBS, said: “I don’t expect and I don’t want a bonus for 2007.”

UBS is understood to have cut the cash proportion of bonuses to a maximum of 30 per cent.

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