Investment banks in the City of London have stopped hiring staff as they wait and see how the credit crisis plays out. The Daily Telegraph

The freeze was initially limited to debt-related and mortgage businesses, but has since spread to banks’ prime brokerage and principal trading divisions, and is expected to ripple out to other financial services.

Deutsche Bank has already closed one of its credit proprietary trading desks, which invests the bank’s own money, after it lost €100m (£67.6m).

US banks Citi and JP Morgan, which tend to react more quickly, have not only stopped hiring, but have also started laying people off. Second-tier banks such as Societe General and ABN Amro have followed suit.

Lehman Brothers and Bear Stearns have already announced job cuts.