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Until a few days ago, when people talked about London's bankers, they always mentioned a little place in Soho called Movida, where one night an investment banker spent £26,000 ($49,300) buying his half-dozen friends a few dozen bottles of fine champagne, which he simply sprayed all over the room like a Formula 1 victor. He then happily picked up the £15,000 cleaning tab.

This week, with the British financial industry in crisis as a second major bank was taken over by the government, Movida's doors were closed. Manager Alex Wilson said in an interview at the bar that he hopes to reopen it with an eye to a different clientele.

Gone for good, he says, are the thousands of bankers able to afford the £3,500 average bar tabs of the good old days of 2008.

“Obviously, when 100,000 bankers are losing their jobs and their bonuses, something is going to have to change,” he said.

“We're hoping for some very wealthy oil people from Dubai, because the bankers just aren't coming out any more.”

Manhattan's meltdown may have grabbed the headlines, but London's fall has been far more precipitous, and this week it has begun cutting deeply into the financial sector's – known as the City – flamboyant lifestyle, and the mythology of itself.

The guy spraying Cristal on the curtains has been replaced this week, in the water-cooler talk along the Thames, with the rather different tale of Kirk Stephenson, the 47-year-old chief operating officer of one of the City's most successful private equity investment firms, Olivant.

On Saturday morning, Mr. Stephenson threw himself in front of a train near his country manor, leaving a wife and child behind. Colleagues said he had lost a fortune. That occurred only days after another investor killed his wife and children and burned down his highly leveraged country estate, hours before bailiffs were to repossess it.

There is a widespread sense that London has been more deeply wounded than New York, and the numbers support it. Bank bailouts in the past year have run to the equivalent of a staggering 8.6 per cent of Britain's gross domestic product. By comparison, the U.S. bank rescue burden, even with the proposed $700-billion (U.S.) government bailout included, amounts to only 7.1 per cent of the American economy.

And there are plenty of signs that the British collapse has cut deeper into the fabric of a city that has 350,000 people, or almost 6 per cent of its population, working in banking and finance.

Monday's government takeover of Bradford & Bingley, the country's eighth-largest bank and one of its largest mortgage lenders, raised fears that the entire British financial and banking sector may be heavily exposed to bad mortgage debt, which was widely issued in Britain during the huge real estate boom of the past 15 years.

Starting in the 1990s, many working-class residents withdrew capital from their homes to take out newly authorized “buy-to-let” mortgages on second rental homes, leaving their entire financial futures dependent on rental incomes. The British housing market, and the securities it has backed, is now widely seen as a delicate row of dominoes ready to fall. House prices in England have fallen by more than 10 per cent during the past year, according to mortgage lenders, after a decade and a half of almost continuous increase. Some reports now suggest that they could fall a further 30 per cent, creating a real estate crash that could rival the one in the U.S.

And, unlike the United States, the real estate crash has begun to hit the financiers themselves. Last week, 38-year-old investor Robert Bonnier was evicted by the bank from the Knightsbridge mansion he had bought last year for £12-million, making it the largest repossession in the country's history.

And real estate analysts said there are at least five large mansions in his neighbourhood that are facing imminent repossession, and hundreds more houses likely to be seized. “The knock-on effect of the [bank] collapse will mean, like everything else, land prices fall further, faster,” said Jim Ward of Savills, a real estate agency specializing in top-end property. “So this could all happen a lot faster that we thought.”

Now City bankers who had become accustomed to huge bonuses – more than 1,000 people made annual bonuses of more than £5-million last year, by one estimate – and dinners costing more than £2,500 are learning to live on a different level.

Goldman Sachs employees in London, until recently known for spending thousands on lunches and employing private limousines daily, have received a memo saying the bank will only pay for taxis home after 10 p.m., and suggesting they eat in the company cafeteria.

Bankers with the London arm of Deutsche Bank have been ordered to take only public transit to work and to limit expense account lunches to £51 per person, according to an internal memo obtained by a German magazine. The bank also banned the widespread practice of charging strippers and other adult entertainment services to expense accounts.

Signs abound that London's financial employees, whose eight-figure bonuses have led them to live like a regal elite, are dramatically scaling back their lifestyles.

The sushi restaurant Ubon, whose £70 entrées drew packed crowds to its Canary Wharf location for eight years, closed its doors on Friday. Michelin-starred chef Nobuyuki Matsuhisa explained that his eatery was next door to the London headquarters of Lehman Brothers, whose 4,500 employees instantly lost their jobs when the investment bank collapsed two weeks ago.

It is now estimated that more than 110,000 London bankers and investment executives will lose their jobs in the next few months.

That has put a serious crimp in businesses that cater to the thousands of people here who were, until very recently, earning salaries in the tens of millions of pounds. Sports car dealers, jewellers, landscape gardeners, high-end real estate agents, private schools and high-priced call girl agencies all reported sharp drops in billings this month.

One of the few such firms to benefit has been Berry Brothers and Rudd, the exclusive City of London wine merchant, which Tuesday reported a £9-million surge in sales over the previous week.

None of it is likely to be sprayed onto restaurant walls, though, or consumed at all. Managers explained that fine wines, as long as they are kept in the cellar, are one of the few relatively safe British investments that are not subject to capital gains tax. In a dangerously volatile market, those few London bankers with spare money are looking to stick it back in the bottle, and hope for better days.