The days of lavish expense accounts, idling taxis, rounds of golf with clients and boozy away-days are over for the world’s bankers, amid growing evidence of a drastic clampdown on perks.

Mass lay-offs are expected to be the primary means of cutting costs. This week, Royal Bank of Scotland is expected to cut about 7,000 jobs as it integrates ABN Amro’s investment bank into its global markets division. ABN’s operation in the Netherlands is expected to bear the brunt. RBS, which last week unveiled a £12 billion rights issue, is under growing pressure to ramp up the integration as the financial sector feels the impact of the credit crunch.

From Canary Wharf to Wall Street, big financial services houses are preparing redundancy programmes, tightening up on employee expenses – sometimes cutting even the tiniest perks, such as free drinks - and insisting that client entertaining is cleared in advance.

Goldman Sachs, the world’s most successful investment bank, which unveiled net earnings of more than $11 billion (£5.5 billion) last year, has stopped offering free bottled water and fizzy drinks to its employees in an attempt to control costs.
A spokesman said: “When times get tough, any prudent company more aggressively manages expenses.”

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In London, at the bank’s European headquarters on Fleet Street, Goldman circulated a memo entitled Policy Changes - Evening Meals and Taxis, in which it bemoaned the significant cost of providing free meals for staff who were still working in the office after 9pm. Goldman has made the service unavailable before 10pm, along with the free black cabs home.

At Marsh, the world’s biggest insurer, Joe McSweeny, president of the group’s United States/Canada division, sent an e-mail to all his American employees outlining the company’s more disciplined expense management. The e-mail said that the group would no longer provide reimbursement of country club membership, reimbursement for meals or for entertainment that did not involve clients.

Mr McSweeny said that Marsh would no longer pay for parties or team lunches without approval from the president and it would not meet the cost of parking for employees who drove to work. It will not pay for newspapers and has refused to pay waiting time for taxis. No temporary workers would be hired to cover holidays or absences of less than two weeks.

Mr McSweeny added: “Our current margin pressure, as well as the difficult pricing and competitive environments, require that we look for ways to trim and optimise spending in order to preserve our ability to invest in capabilities that enable us to better serve our clients and win in the marketplace.

“We need to challenge ourselves when spending the company’s money: does this further our objective of serving the client? Are we thinking - and spending - like owners of the business?”

One insider at Marsh told The Times: “They’ve ripped out the candy machines from HQ because someone in HR worked out that free candy and chips [sweets and crisps] would cost $1.2 million if it were extended across the group. The real issue here, that everyone has worked out, is that these measures are pointless because no one seriously has the time to police whether there’s another $10 on the cab receipt for waiting.”

A spokesman for Marsh said: “Clearly expense management is one area Marsh has been targeting for improvement.” At the headquarters of Deutsche Bank in Frankfurt, bankers have been told that they will be reimbursed for taxi trips during a public transport strike only if they have secured the explicit approval of their line manager. They also need permission if they want to take a client to lunch if the bill is likely to exceed €65 (£51) per person.

The clampdown on expenses is part of a broader drive to cut costs, as banks seek to replenish their capital reserves after collectively losing more than $250 billion in the credit crunch.

On Wall Street, more than 36,000 banking executives expected to lose their jobs, representing one in five of its population, in the next two years, according to New York’s Labour Department.

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