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More Bank Job Cuts on Way as 'Game's Up'?

Credit Suisse is rumored to be the latest major bank set to announce large job cuts, and it is unlikely to be the last, Peter Toogood, head of investment at Old Broad Street Research, told CNBC Tuesday.

“The game’s up. There’s no transactions, M&A isn’t happening, this is what deleveraging looks like. It’s a decade of austerity and that makes people feel more unlucky,” he said.

“Investment banks are going to struggle. There’s not going to be mass lending going on. The leverage game is over and people can’t accept it. Volumes are declining en masse and their headcounts are too high.”

Trading volumes have declined overall since March 2009, with falls in U.S. stock trading volumes in each month this year. In April, there were 6.5 billion trades on average per day, compared with 12.1 billion at the market’s height in 2008. Both the New York Stock Exchange and Nasdaq reported that trading fell in the first quarter of 2012.

Lending has also shrunk, both because of worries about bank capitalization and because of reluctance to borrow money on the part of companies.

When acquisitions happen, they are often based on cash rather than leverage, which means that banks have a smaller size of the pie.

Moody’s mass downgrade of the world’s biggest investment banks last week showed the increasing worries about the sector.

“This is cyclical and we’re going through a cycle where that will be there for a little bit, but I’m optimistic about the future,” Thomas Kloet, chief executive of Canadian stock exchange group TMX, told CNBC.

“We think that liquidity is down mainly because you have a pretty low volatility index right now, presenting less trading opportunities. That’s impacted liquidity.”

Massive injections of liquidity from the Federal Reserve , the Bank of England and the European Central Bank have not trickled down to increased lending or acquisitions.

“People still have this hope and expectation that the authorities will fluff and stimulate,” Toogood said.

“It’s beginning to dawn on them that that’s where we’ll be – a relatively low level of activity, which doesn’t mean the world ends, it’s just a different shape.”