The liquidity crisis in financial markets is starting to hit recruitment in the City.

Chris Croft, manager banking technology at Huxley Associates, told Recruiter there had been a slow down in hiring across the City, specifically in investment banks during the past two weeks. "Probably 50% of our accounts have reduced their hiring dramatically," said Croft.

Banks were still doing some recruiting, he said, but most was for "critical" front office or strategic roles. Croft said the main slow down was "in big projects taking on hundreds of people."

Croft said that the main reason for the drop in hiring was because "the poorer performance of the banks left less money in the pot" to buy out the bonuses of staff, who otherwise would have moved to new positions.

Croft predicted that one consequence would be more competition between job candidates.

Croft said that the general moratorium on recruitment in the City that usually began in October and November, during which banks worked out what staff they needed for the following year had started much earlier. "No one is prepared to say its because of the market, but it's a coincidence that they are all doing it at the same time, and doing it earlier," he said.

Sarah Butcher, editor at eFinancialCareers.com, said: "All the sexy roles, working as a trader, mergers and acquisitions — those that pay a lot of money, they have stopped hiring for. In particular, there is nothing going on in leveraged finance and structured credit."

Deutsche Bank shut one of its credit proprietary desks at the end of August with the loss of 10 jobs but a spokeswoman told Recruiter that this "was completely normal" when a trading strategy didn't work. "There is no hiring freeze at the moment," the spokeswoman insisted.

In a poll of City professionals by eFinancialCareers.com, 49% said they thought redundancies were "very likely" due to current events.