More than 20,000 work at Dublin's International Financial Services Centre (IFSC)

Following the announcement on Tuesday by the nationalised UK bank Northern Rock, that it is to shed 2,000 jobs - - a third of the workforce - - and the implosion of US investment bank Bear Stearns, which has a payroll of 14,000 globally, including 1,400 in London and 150 in Dublin, Paris and Frankfurt, staffs at financial centres are bracing for a raft of job cuts.

Citigroup is expected to soon announce a new series of job cuts that may amount to up to 10% of of it global head count of 370,000. Merrill Lynch, another big loser from the subprime debacle, is also due to make big job cuts.

Swiss banking giant UBS, is reported to be considering cutting up to 10% of its workforce, or 8,000 jobs. The bank has already announced plans to axe 1,500 jobs, and a further cost reduction plan could leave nearly 10,000 UBS staff out of work.

Experian, the research agency, says that investment banking cuts will account for the bulk of up to 200,000 jobs disappearing across the entire financial services sector this year. 

About 65,000 have been lost since the credit crunch started in August, it said.

The sector employs about 12m in the US and Europe and survived the downturn in 2001 to 2002 with no net job losses.

The Financial Times says that job losses accounting for about 15% of the US and European investment banking industry have become a near certainty in the first half of this year following the latest turmoil on Wall Street, senior bankers have warned.

The US is expected to see the greatest reduction in headcount, at about 15%, reflecting the rapid slowdown in the economy and looser employment contracts.

Cuts totalling about 10% are expected in the City of London and other European financial centres.

A forecast published on Monday says that 10,000 UK jobs will be lost in the City this year, as banks retrench.

The forecast is an upward revision from the Centre for Economic Business Research, which suggested just three months ago that job losses in the City would reach only 6,500 this year.

Doug McWilliams, chief executive of the CEBR, warned that the total could yet rise again. The economic research group publishes data on the City twice a year, and is due to report again early next month. "Obviously the world moves on. Previously we thought it would be a slightly more limited number of jobs that would be lost but confidence is rather weaker than we assumed. On what we can see now, the number of job losses will be higher. It is all to do with confidence, and confidence is one of these things which is tremendously fragile and volatile. The number could yet change."

Several thousand jobs have already been cut at banks including Citigroup, Morgan Stanley, Goldman Sachs, Deutsche Bank and Merrill Lynch.

Boston Consulting expects it will take two to three quarters before the industry gets more clarity. "If the market conditions haven't improved materially, then there is a potential for a more aggressive pull back among the firms," it said.