Such is the demand for top staff in the City of London that investment banks are prepared to buy out the huge annual bonuses of top performers they want to poach from rivals, a City recruiter has revealed.
The phenomenon of bonus 'buy-outs' has not been seen in the city since 2000, according to recruitment company Morgan McKinley. But with 14 per cent more new jobs on the market than there are candidates looking to move, banks are having to take expensive steps to encourage individuals to move roles before their bonus has been paid by their current employer.
"This type of behaviour inevitably follows a good year in the City," said Robert Thesiger, chief executive of Morgan McKinley.
"With bonus expectations running high, individuals are less willing to move roles prior to receiving their bonus payout and if you combine this with an extremely candidate driven market, the outcome is that employers are having to work even harder in order to fulfil their hiring needs.
"One way financial institutions are ensuring that they secure the talent they need, is through bonus 'buy-outs', particularly at the top end of the market. These are happening with much greater frequency than we have seen over the last few years."
After lean times in the early part of the decade following the dot-com crash, banks are once again seeing near-record levels of merger activity and new share issues.
And with optimism strong for 2007 and bonus payouts for top performers running into the millions, banks are also prepared to part with huge sums in order to secure top performers.
"At the beginning of this year, the priority for City banks was to get the right person to drive the expansion forward and once these roles had been filled, middle and back office hiring became a priority," Thesiger said.
"With further expansion expected to take place in 2007, individuals at all levels will be in demand and unless companies are willing to buy out bonuses, candidates will be harder to get across the line."