The associate intakes of 2006 and 2007 are being decimated, according to both bankers and the recruiters who are left to pick up the pieces. So what does an MBA with big debts and only one year’s banking experience do? Private equity, boutiques, or strategy consulting seem to be the answer.

“Most of the people who’ve gone from the team are MBAs who joined at the junior associate level,” says a VP at one US bank. “Unfortunately, it just makes sense to get rid of them – they have a limited amount of banking experience and they’re relatively expensive. They’re getting hit particularly hard.”

Recruiters confirm that a disproportionate number of recent MBAs are coming through their doors. “We’re getting a lot of MBAs coming to us,” says Katherine Howe at recruitment firm KHG Partners. “They’re either last year’s banking intake, or the intake of summer 2006.”

Faced with the choice of dumping a recently hired MBA or an analyst who’s been nurtured at a bank for several years, Logan Naidu of recruiters The Cornell Partnership, says banks are typically going for the former option. “MBAs are as expensive as third-year analysts, but analysts have spent three years with the firm and know how a deal is put together.”

Business schools are a brake on the MBA purge, however. If too many of their alumni are ejected, banks get a bad reputation on campus at the major business schools, which they are anxious to avoid, says Howe: “If you hire a load of MBAs from a top business school and treat them all appallingly, that school might be less inclined to allow you to recruit on campus in the future.”

As a result, she says some banks are now letting go of high performing third-year analysts rather than reneging on offers made to MBAs who are joining this year.

MBAs who are dumped by banks do have other options. “The alternatives are boutiques, private equity, corporates, or strategy consulting, depending on experience and background,” says Naidu.