Banks slash IT contractors' pay

Banks including Nomura and Royal Bank of Scotland have cut pay rates for IT contractors and other temporary workers by 10 per cent and more as they take an increasingly hard line on costs.

In a manoeuvre still rarely seen since the height of the financial crisis, Nomura, Japan's biggest investment bank, cut wages for some contractors by 10 percent in September, three sources familiar with the matter said.

Nomura employs about 300 such staff, many of whom are IT contractors, two of the sources said.

British banks Lloyds and RBS, which are going through a tough round of cost-slashing, also recently cut pay for some contract staff, four sources said.

At RBS, these wages came down by 10 per cent, according to two sources, while for IT contractors at Lloyds rate cuts were 10-15 per cent.

More broadly, all incumbent contractors at Lloyds who have been working for the bank for over six months will have their day rates cut by 10 per cent on extension, bar some exceptions, one source added.

Nomura and RBS declined to comment. A Lloyds spokeswoman said that contractors continued "to be a valuable resource for the group and we will continue to ensure that their pay structure is fair and competitive.."

The pay cuts will affect the daily rates contractors get. For an average front office developer, these could range from £450-£700 per day, recruiters in the sector said.

Few other rivals have yet to go down this route after rates rose again after 2008, although it is likely to become more common. Back then, many top investment banks including JPMorgan and Deutsche Bank were also among those targeting contractors' pay.