Frayed nerves in the City yesterday brought embarrassment for US banking giant JP Morgan, which went into public relations overdrive to quash a horror prediction by one of its own analysts.
A JP Morgan note penned by its Amsterdam-based property analyst Harm Meijer speculated that 40,000 jobs, by far the highest estimate to date, would be lost in the City of London in the fall-out from the credit crunch.
The figure was double the prediction made last December by the investment bank itself, which was at the eye of the storm in the US when it took over the fatally wounded Bear Stearns last month.
However, a spokeswoman in London commented: "This number is completely out of context. This is not JP Morgan saying this is going to happen."
Sources suggested that the bank regarded the figure as "a guesstimate" based on "extrapolation from anecdotal evidence linked to the property market", and unapproved by the bank's economists.
Meijer, however, was quoted by Reuters news agency as saying that a recent Centre for Economics and Business Research estimate of 19,200 job losses was "too optimistic".
His report, which was focused on the outlook for European office markets, predicted that City office rents would fall by 16% over the next two years.
One consultant warned yesterday that Edinburgh could still be vulnerable from the banking jobs fall-out.
David Fortune, director of Novitas Partners and formerly with Bank of New York in Scotland, commented: "There is a fragility about Scotland's investment administration operations, because they are just as likely to be undercut as any other part of the financial services sector."
He said the big US banks with Scottish operations were busy opening centres in locations such as Poland and South Africa.
Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, said: "There is no major issue for staff in Edinburgh. However, we should not lose sight of the fact that some employers may take the opportunity to trim their costs, especially if they are connected to weakness in the US markets."
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