Banks Cut IT Contractor Pay

LONDON, Oct 10 (Reuters) - Banks including Nomura and Royal Bank of Scotland have cut pay rates for IT contractors and other temporary workers by 10 percent and more as they take an increasingly hard line on costs.

In a maneuver 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 percent, according to two sources, while for IT contractors at Lloyds rate cuts were 10-15 percent.

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 percent 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 pounds ($700-$1,100) 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.

Banks are also making job cuts among permanent staff, with Lloyds planning to lay off 15,000 people after already making thousands more redundant since the financial crisis.

Nomura is axing with just under 400 jobs, with 300 of those falling in Europe, where it employs close to 4,500 people.

Banks are trying to find others ways to slash costs, including cracking down on expenses and wages, partly in a bid to save what jobs they can. Investment banks are trying to cut salaries for permanent staff by 10-15 percent where possible and slash bonuses.

Contractors, brought in to develop essential projects sometimes for months at a time, are feeling the squeeze as banks put some build-outs on ice.

"It has been a very quiet summer, with very few roles opening up," said one headhunting source.

Note: $1 = 0.640 pound

By Sarah White, Editing by Andrew Callus