The average number of qualified candidates for each new City of London job vacancy has halved from 5.7 in March 2009 to just 2.7 in March 2010, research by financial services recruitment firm Astbury Marsden reveals.
Mark Cameron, chief operating officer at Astbury Marsden, said: "This time last year, few would have predicted such a dramatic turnaround in the City job market.
"These figures indicate we risk returning to the pre-credit crunch City employment market, with regular bidding wars and candidates juggling multiple job offers.
"The political storm cloud hanging over the financial services sector hasn't lifted yet. The banks face a dilemma - show extreme restraint on pay and face staff defections or pay up and risk the wraith of politicians.
"For teams and departments faced with more work or business opportunities than they can sensibly deal with, that choice is easy to make. Retaining staff is not just about throwing cash at them. Some employees can be won over by changing their job title, reporting lines or responsibilities."
The report shows sponsoring executive education programmes such as an MBA or masters in finance for employees is a useful retention tool with the fees repayable by the employee if they leave the company.
Cameron added: "Employers are now asking us to approach those employees who decided to spend the past six months renovating their house, backpacking or trying to get to grips with the farmland they bought years ago."
"We have just placed a banker who has spent the past six months raising pedigree cattle - that's not so unusual."
"For those unemployed bankers that haven't yet been able to build up the right portfolio of skills or a good track record, the market is still quite tough. At the moment employers are focused on getting the best candidates even if that means chasing prices rather than relaxing their standards."
