The Evening Standard reports that thousands of 'shell shocked' City staff are bracing themselves for the possibility of pay cuts as the banking industry suffers through the worst conditions in several decades.
The newspaper quotes a unnamed City employee who said: 'People still in work are expecting base salary cuts of 10% or more and a non-existent cash bonus, except for the top rain-makers'.
Zero bonuses are likely, but surely salary cuts are not on the cards. This is just not the way the City does business. If you have a group of people who are not performing or market conditions make their jobs impossible to do, investment banks will simply exit them. They can do little damage when they have left the firm.
To cut base salaries, however, and run the risk of alienating large groups of individuals who remain in the business would be suicide. Firms would have to be desperate or incompetently managed to implement such a move. Times are hard, but not desperate - yet. And as for investment banks being incompetently managed, well, let's not go there......