Salaries in the City hit by credit crunch

Gone, for now, are bankers' days of conspicuous excess, those golden lunchtimes of lore when traders at Barclays Capital spent 44,000 on wine alone during a meal at Gordon Ramsay's Petrus restaurant, and bottles of vintage bubbly were sprayed around City bars in the manner of Formula One drivers on the winner's podium.

Belts have been tightened a couple of notches. For the banks' low- level foot soldiers, it means an end to priority plane boarding at airports. Many firms have instituted bans on expenses lunches for two costing more than 100.

Yesterday brought new figures showing that the impressive City starting salaries have been caught in the credit crunch. Although still the envy of other professionals, the average take-home pay of new recruits to London's financial sector fell last year.

Candidates signed up by Morgan McKinley for investment banks, hedge funds and asset managers receive 5 per cent less than their predecessors did 12 months ago. Joslin Rowe, which provides staff across the financial sector, reports a pay drop of 4 per cent.

Both firms say that the supply and demand situation has quickly reversed, to new graduates' detriment: there are now far more people seeking jobs in the financial sector than there are vacancies available, with the inevitable effect. The number of new jobs had fallen by 17 per cent in the last year as banks continue to lay off staff and operate strict hiring limits.

"The increase in available talent means employers have a greater pool of choice when filling roles," said Robert Thesiger, the chief executive of Morgan McKinley's parent company, Imprint plc. "This is driving wage inflation down when compared with last year."

The average starting salary at Morgan McKinley this year was 48,300; at Joslin Rowe it was 39,700. The total take-home often rapidly soars, with many staff also receiving performance-related bonus payments, which rocket as their careers progress.

Out with City employees' expensive lunches and first-class travel has gone the all-expenses-paid evening sojourns to strip clubs with valued foreign clients.

A leaked memo shows that employees of the Deutsche Bank has been told to restrict lunches and dinners for two to less than 100 and travel second class on short train journeys. Also, the Tube rather than taxis should be used and no expenses will be paid for adult entertainment of any kind.

Some Deutsche Bank staff complained about the "petty attitudes" in the bank directive which were issued on the orders of the chief executive, Josef Ackermann, who is paid almost 10m a year. Goldman Sachs recently issued a memo saying it would only pay for taxis home after 10pm and staff should eat in the canteen rather than order meals from restaurants delivered to their desks.

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