More contractors should expect a long Christmas break

RBS is forcing its contractors to take a mandatory two-week break over the festive period, and it seems likely that other banks will take a similar route (along with rate reductions) in order to stave off the need for large job cuts.

In theory, late December to mid-January is a quiet period for those working in IT roles. Most banks have what is variously deemed a 'change freeze' or a 'code release lock-down' meaning that any new work will not be released into a live environment.

There's still work to be done during this period, developers can still work on new code and those working in technical support roles on the trading floor are obviously still in demand, but it's not a critical time for most IT projects.

"Most banks require their contractors to take holiday at some point in the year, and the noises we're hearing from them now are that mandatory absence over the Christmas period is an easy way to cut costs before the end of the financial year," says one IT in finance headhunter. "If you have hundreds of contractors earning anything from 500-1,200 a day, taking that cost out for two weeks can save a decent amount of money."

So far, despite a muted appetite to recruit IT contractors, few banks have actually cut back in large numbers. Instead, in a situation reminiscent of late-2008, 10% rate cuts are being imposed with increasing prevalence.

We're told that BAML, Deutsche Bank, Lloyds, Nomura, RBS and UBS have all imposed rate cuts on their contractors, but (so far at least) Barclays and HSBC have yet to do so.

The ongoing squeeze has prompted many technology contractors to start considering their options.

"The mandatory holiday, combined with the rate cuts, could be a trigger for many of us look to other positions," one IT contractor working in an investment bank tells us. "The market is a lot tougher than it was earlier in the year, but there are still other options available, so banks should be careful how they treat their contractors."