Average basic City pay rose by just 2% this year, leading financial services recruitment firm Astbury Marsden said today.
The rise is below inflation and marks a drastic fall from previous years, where financial services pay in London rose by around 12% year-on-year.
It now stands at £84,438 from £83,000 in 2011.
Astbury Marsden says that the slowdown in pay growth has been caused by the intense pressure being applied by regulators and shareholders, trying to reduce staff remuneration levels.
Mark Cameron, Astbury Marsden chief operating officer said: “The FSA has recently gone to the lengths of briefing the chairs of remuneration committees that overall pay should show a sharp decrease in 2012 – that is an unprecedented step to take. It shows just how much pressure the banks are facing from the FSA on staff pay.”
The research also showed that average base pay for managing directors fell by 29% from £237,000 in 2011 to £167,364 in 2012. The pay reduction has also been helped by the culling of very top jobs paying out six or seven figure salaries, the recruiters said.
“With guaranteed bonuses in the City now strictly off the menu, banks and hedge funds have been relying on higher base salaries over the last couple of years to attract senior staff,” says Marsden. “The current trading and regulatory environment has now made those higher fixed costs unsustainable – and some senior bankers may have been willing to bite the bullet and take a pay cut just so they stay in a job.”