Merrill Lynch has sharply cut the use of private jets among its senior managing directors by requiring them to obtain direct clearance from the global head of investment banking to hire one and to demonstrate there is no more efficient means of transport.

The new policy is part of a drive by the Wall Street bank to reduce administration and non-payroll expenses. By bearing down on these costs, Merrill aims to give itself the scope to limit lay-offs and pay better bonuses to top performers, even as the economic slowdown eats into investment banking revenues.