Investment bankers in London are steeling themselves for more job losses as Citigroup and Goldman Sachs eliminate thousands of roles.

Citigroup, America’s largest bank, is expected to cut up to 6,500 investment banking jobs – as much as 10 per cent of its roughly 65,000 headcount worldwide. Some staff could be told today that their services will no longer be required.

It is believed that entire trading desks in New York, London and other cities will be eliminated. Senior managing directors will not be immune from the layoffs, sources said last night.

Citigroup’s mergers and acquisitions bankers may bear the brunt of the cost-cutting because their ranks were not sharply reduced earlier this year. No major department of the investment bank is likely to be spared, apart from certain businesses in emerging markets and its lucrative transactions services division.

In April, Citigroup said that 9,000 jobs would go on top of the 21,000 eliminated in the past year. It has a global workforce of about 350,000 people. The bank made the announcement in April as it revealed further writedowns of $15.2 billion (£7.7 billion), resulting in an overall loss of $5.11 billion for the first quarter, and taking its total hit from the credit crisis to $33 billion over the past nine months.

The cuts are the first major decision taken by John Havens, who took charge of its institutional clients group, which includes the investment bank, in March. Mr Havens, who is close to Vikram Pandit, the Citigroup chief executive, believes that the credit crunch has made some of the investment bank’s businesses uneconomic, while others are failing to make enough money. Mr Pandit wants to cut annual expenditure by some $15 billion.

Citigroup has raised about $30 billion from investors, mainly from sovereign wealth funds in Singapore, Kuwait and Abu Dhabi, to replenish its capital reserves in recent months.

Goldman Sachs has weathered the credit crunch better than its Wall Street competitors and last week announced a better-than-expected second-quarter profit of $2.09 billion – down 11 per cent on the same period last year.

However, it has not been immune from the downturn in activity that has resulted from the crunch and is understood to have made more jobs cuts at its investment banking division last week.

It has been eliminating 10 per cent of the roles in the M&A and corporate fundraising divisions this year, and the latest round of redundancies began last week. They add to the departures that follow Goldman’s annual performance review, which sees the worst-performing 5 per cent of the staff leave. Its headcount has fallen by about 400 people between the first and second quarters.

Job cuts in Europe, which have lagged behind those in the US, are gathering pace as banks try to weather the tough market conditions.

Last Friday Credit Suisse said that it will cut about 75 jobs in its investment bank and support services division in the UK. The Swiss bank has cut 1,000 investment banking jobs globally this year, following 170 redundancies in that division last year. It cut 150 jobs in its residential mortgage backed securities business.

Both Citigroup and Goldman Sachs failed to return calls last night.

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