Banks etc. continued cost staff cutting has wide fallout.

Redundancies announced yesterday at US bank Morgan Stanley amount to almost one in thirty of current staff according to some estimates. Citgroup is rumoured to be about to announce over 1,000 job cuts mainly in investment banking. French Bank Société Générale is also rumoured to be preparing to lay off several hundred, again mainly in investment banking. Credit Suisse First Boston is has reduced its research into smaller companies - and in doing so helped towards the target of reducing headcount by over 1,750 this year - and that in addition to an across the board reduction of 16%. Even compliance staff at CFSB London have moved on.

Last month, a US insurer announced job cuts of 12,000. In August, Royal and Sun Alliance, a large UK insurer announced 1,200 redundancies. Even the accounting sector is not immune with KPMG planning on losing 700 partners and staff in London from accounting, audit and its legal firm KLegal. Also in London, Andersen lost 1,500 jobs following the Enron debacle and the firm is now in shreds.

Recently, several UK merchant banks announced that they were cutting bonuses "in some cases back to zero." The days of the seven figure bonus seem to be close to an end. Last year, one London fund manager reportedly received a bonus of GBP6 million. The average income in the UK is about GBP22,000 according to the UK government's figures.

The cost cutting is not restricted to staff: according to press reports several London financial services businesses now have several thousand square feet of prime office space sitting empty and they are competing for the same tenants. London has not seen that situation for several years and rents have been rising inexorably.

The problem for those companies seeking to make vacant space contribute something is that in England, commercial leases invariably require the consent of landlords to sublettings and often contain restrictions on the terms of any subletting - these are commonly that sublettings may be only of full floors and may not be at a rate below the current rent, and that rental terms must include rent review terms similar to those in the headlease. London commercial property lawyer Norman Saville told World Money Laundering Report: Online that these terms make it difficult for companies to find tenants able to mitigate the existing costs. Although there are ways around the problem: "Even though the rent may be at an amount not less than that passing under the headlease, the tenant may receive a lump sum as a signing bonus to mitigate the overall cost," he said. But this does not help the cashflow position as redundancies and such bonuses as remain start to bite.

Consultancy and training firms are reporting that life in London is getting increasingly tough: "the money has dried up" one training company manager told World Money Laundering Report: Online. Companies were expecting a bumper time leading up to the implementation of the UK's Financial Services and Markets Act which came into force on 1 December last year. And they developed products and services for what was predicted to be a growth market. Financial services businesses were universal in their approach: all made significant provision for training and consultancy leading up to the huge changes that the Act unleashed on the industry.

Then on top of all the compliance burden that was creating came the enormous impact of 11 September 2001 which led to a re-focussing of compliance spending. Several training companies have either gone out of business or made considerable cuts in stafff and spending. Revenues across the board are down.

It's beginning to look like a bleak Christmas in London and New York.

The carnage is regarded in south east Asia as delayed reaction. "We went through this two years ago," said on former banker. In Singapore things were desperate for some: "some of my friends went into work and their electronic keys didn't work. When they took them for testing, they were told 'you don't work here any more.' People were not even getting 24 hours' notice."

The hangover remains in Hong Kong where the optimism inherent in the place means widespread credit card spending to keep up living standards. There have been no significant bonuses for two years and this year is not expected to be any different.

In the USA, demands for specific compliance measures such as OFAC monitoring has meant budgets being diverted from information and training services. Conference organisers have complained that events are at best marginal and are often either loss making or cancelled.

Bloomberg is battling for market share in the information sector - its TV coverage now heavily promotes its own subscription services even within editorial material. And Reuters is suffering: recently announced figures for 2002 Q3 were GBP25 million down on expectation, 7% below same period last year.

And none of this takes account of the mess that banking sectors face in South Korea, Japan and much of South America.