Nomura International - the London-based arm of the Japanese investment bank - is cutting the number of IT contractors it employs and slashing the pay of those stilll with the firm, according to Here is the City. 

Nomura's IT contractors were informed of the move by an e-mail saying that the bank will "reduce contractor spend through a combination of head-count and a 10% contractor rate reduction across technology".

The bank says the decision to reduce contractor spend was made following an internal review and external benchmarking exercise.

However Nomura is not the first bank to cut contractor pay in order to reduce costs following the credit crunch. According to a report by Contractor UK, Deutsche Bank, Barclays Capital, BNP Paribas and Merrill Lynch have all imposed "take it or leave" pay cuts of up to 11% on IT contractors.

Royal Bank of Scotland is also reviewing its cost base at its technology division, including contractor pay. In an internal memo sent last week IT contract staff were told to accept a 10% pay cut from next week or "leave immediately", says Contractor UK.

News of a fall in contractors rates follows research from Association of Technology Staffing Companies (Atso) in Februrary which showed that some  IT contractors at City banks saw their pay rise to the highest level for two years following the credit crunch.

Atso said hourly rates for IT contractors working in the City rose after banks moved to cut employment costs by putting a freeze on permanent hires, thus creating more opportunites for temporary staff.

But predictions by Atsco that demand for IT contractors in the banking sector would receive a further boost if the economic outlook remained shaky seem naively optimistic now in light of the latest news.