As banking-sector analysts get gloomy about Macquarie's earning prospects for the rest of 2010, speculation is also growing in recruitment circles that the firm may have to make redundancies before year-end.

Last week chief executive Nicholas Moore issued a subdued quarterly update. He said recent weakness in financial markets would have a major impact on the firm's investment banking arm, Macquarie Capital, as well as its equities and securities division and its fixed income and commodities business.

Such comments add weight to the argument that Macquarie's headcount is looking rather bloated. The firm has added almost 2000 people over the past year, with North American and European acquisitions taking its headcount to more than 14,600.

But Macquarie's global ratio of revenue to employees is not as strong as the main Wall Street i-banks, according to figures from UBS. The Australian firm generated about US$411k per staff member in 2009, compared with US$1.34m at Goldman Sachs, US$1.12m at JP Morgan and US$938k at Morgan Stanley.

Moore has not yet commented on the likelihood of any cuts, but he will be hoping that a potential downsizing raises profitability by effectively targeting underachieving employees, while not panicking high performers into leaving of their own accord.

Macquarie has already suffered a string of recent defections after it paid largely disappointing bonuses in May, so retention will remain critical this year, even if some redundancies are made.

"Until the GFC Macquarie had a good record for retention, but that is being undermined now. It's lost enough people already this year. People have gone in M&A advisory, structured finance, trading and research," says one headhunter who asked not to be named.

Senior bankers who have recently left include Andrew Low, Macquarie Capital's chief operating officer; US equity capital markets boss, Jim Rossman; and head of US financial sponsor coverage David Baron.

And in general terms, how are former Macquarie employees faring in the job market?

"At the senior level, people are landing on their feet. It's more mixed for juniors. Dissatisfaction with bonus numbers in April saw analysts and associates flood the market with CVs. Macquarie's competitors are no doubt delighted to have a wide choice of high calibre candidates, but with so much choice, they still need to differentiate between the top and the bottom performers within this pool," Michael Notley, director, Taurus Financial Recruitment, tells eFinancialCareers.com.au.