Christie's, Britain's oldest auction house, is to let up to a quarter of its 800 London-based staff go as the fine art market reels from the effects of the credit crisis.

Staff at the London office have been told that their jobs are under review and between 20 per cent and 25 per cent will go, in anticipation of a 20 per cent to 30 per cent drop in sales. The restructuring programme will last for four months. Most of the jobs cut will be mid-level staff.

Its New York office has cut back already, with 80 employees dismissed across departments, including contemporary art, prints, 19th-century art and administration.

The main part of Christie's business is devoted to art, but it also auctions fine wine. The fine art market has altered hugely since Lucian Freud's Benefits Supervisor Sleeping was sold for a record $33 million at Christie's in New York last year. The Russian oligarchs and hedge fund billionaires who drove up the prices of contemporary and modern art have suffered from the credit crunch.

Christie's sale of 20th-century British art last month, seen by many as the mainstay of British private art collecting, ended with 57 per cent of the lots successful — down from 81 per cent at 2007's sale. The sales total of £4.1 million was less than half the £9.4 million achieved last year.

Christie's is not the only auction house under pressure. Sotheby's, its main rival, which is listed in New York, has said that it will save $7 million (£4.6 million) by reducing staff levels and other costs this year.

Christie's and Sotheby's are understood to have lost money in recent months through guarantee agreements, which guarantee vendors a certain amount of money from a sale even if the sale doesn't reach it. In the contemporary art auctions of last November, Sotheby's lost $28.2 million from these agreements.

As a privately owned company, Christie's does not have to announce whether it lost money. The auction house, which was founded in 1766 by James Christie, is owned by François Pinault, the French tycoon. Mr Pinault, who has an estimated personal fortune of $16.9 billion, according to Forbes, also owns a clutch of luxury brands such as Gucci, Yves Saint Laurent and the Château Latour vineyard. Recent reports that the Pinault family may put Christie's up for sale have been firmly denied.

Christie's employs 2,100 people in 85 offices in 43 countries.

The auction house could not be reached for comment.

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