Tuesday’s Headlines: As Financial Districts Go, London's is Shrinking Faster Than All Others, Including Wall Street

London’s financial district is shrinking faster than any other in the world. According to a Bloomberg story, London's Square Mile last year eliminated 58,000 jobs, more employees than any other banking center as the city’s banks suffer at the hands of falling revenue and pressure to lower pay. The future does not look bright for London -- the world’s biggest center for foreign-exchange trading, cross-border bank lending and interest-rate derivatives with 241 foreign banks -- as the U.K government is pushing banks to split their consumer and investment banking units and the EU wants to see taxes on individual trades by the end of 2012.

Recent cutback announcements include 2,000 firings at UBS and 3,500 at RBS, and banks are looking to cut costs by 40 percent in the first quarter of 2012. Smaller stockbrokers and equities trading desks are squeezed as the European debt crisis has left clients skittish and trading volume is down, as are M&A advisory teams suffering at the hands of a worsening economic outlook. However, some bankers remain optimistic. Bloomberg writes:

Ten years ago, London’s bankers were dealing with the bursting of the dot-com bubble and were concerned the City would be left behind as Europe began trading its single currency. It went on to have its most profitable five years on record. This time, bankers say they’re hoping history repeats itself.

Other News:

Morgan Stanley caps cash bonuses at $125,000 and defers 75 percent of pay. [Businessweek]

Citi’s Q4 earnings were down 11 percent as capital markets slumped. [Financial Times]

Wells Fargo’s Q4 profit rose 20 percent on improved loans and deposits. [WSJ]

TD Ameritrade's Q1 profit rose 4.8 percent on tight control on expenses as revenue fell. [WSJ]

BofA considers selling a portfolio of private equity investments to Switzerland’s Partners Group. [Businessweek]

AIA Group, the Asian insurer that is partially owned by AIG, mulls a bid for ING’s Asian insurance business valued at $6 billion. [Reuters]

A Japanese consortium will buy RBS’s aircraft leasing business for $7.3 billion. [DealBook]

Opinion: Banks need to improve online security. [NY Times]

Comp consultant Alan Johnson wishes bankers got paid less. [NY Times]

How RIAs are using interns. [Investment News]