Merrill Lynch, Citigroup, UBS and other banks have seen their complex debt securities businesses wither as new deal volumes tumbled to a 10-year low in the first quarter.

First quarter new issue volumes for securities backed by US residential and commercial mortgages fell between 80 and 95 per cent year-on-year, according to data from Dealogic and Total Securitization, an industry publication.

The drop in new deal volumes has serious implications for the banks that have already taken multi-billion dollar write-downs on their exposure to mortgage-backed collateralised debt obligations that remained on their balance sheets.

Such losses and the drastic reduction in revenues from complex debt securities has led to job losses on Wall Street, which are only expected to increase in the months to come. Banks including Citigroup, Morgan Stanley and Lehman Brothers have cut at least 34,000 jobs thus far and are expected to slice at least another 20,000.

Declining deal volumes also mean that the battle for league-table dominance has been decimated, with too few deals even to fill out a full table in some market segments.

For example, in the market for CDOs – complex securities backed by other bonds – just six banks issued deals in the first quarter, as quarterly deal volumes dropped by more than 80 per cent year-on-year.

Merrill Lynch, for example, which issued 26 new CDO deals with a face value $21.3bn in the first quarter of 2007, issued one $500m deal in the first quarter of this year. Overall CDO sales were worth just $6.4bn, compared with the $103.6bn sold in the same period in 2007.

In the commercial real estate market, the list of issuing banks dwindled to three as quarterly deal volumes for bonds backed by commercial mortgages plunged by more than 90 per cent year-on-year.

Just $3.5bn of commercial mortgage backed bonds were sold in the quarter, compared with $62bn a year ago. US residential mortgage-backed securities came in at $17.3bn, down from $246bn in the same quarter a year earlier.

On Wall Street, many mortgage securitisation bankers have been kept on only to help their employers sort through the wreckage. Once that task is complete, many will be let go.

Estimates for job losses do not include expected cuts resulting from the sale of Bear Stearns to JPMorganChase. Bear, which was a big namein mortgage securitisation, is expected to lose at least half of its 14,000-member workforce.

The housing slowdown has led to layoffs in the mortgage industry, as 15 of the top 20 subprime mortgage lenders in 2006 have shut down their subprime operations, filed for bankruptcy protection or been sold off.