US financial sector pay 'to take major hit'

Salaries among US banks are likely to see a major decline in the coming weeks as a result of poor performance and wider social trends.

A report from the Wall Street Journal has suggested that compensation levels among banking firms for the 2011 fiscal year are likely to be at their lowest since 2008, with lower trading revenue, economic anxiety and limited deal-making all taking a toll.

Other factors precipitating this trend include the recent negative public sentiment towards the financial sector, as signified by the Occupy protests in Wall Street and other finance centres.

Executives are also identifying longer-term issues that they believe will limit profitability for years to come, including regulatory changes and economic shifts.

Rose Marie Orens, a senior partner at Compensation Advisory Partners, told the publication: "Companies definitely have to realise the party as they know it is over."

This comes after a report from risk consultancy Control Risks suggested that wider socioeconomic trends are likely to lead to sharp scrutiny on business practices during 2012.