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At the time, it seemed a great idea. With bonuses for the 25 most highly compensated/most senior staff at TARP firms restricted to no more than one third of salaries, the obvious answer was to whack salaries up.

The likes of UBS, BofA/Merrill Lynch, Citigroup and Morgan Stanley, duly increased fixed payments by as much as 100%.

In retrospect, this may not have been such an inspired idea. Not only does it appear that pay czar Kenneth Feinberg is planning to clampdown on salaries by insisting that 50% are deferred, but banks’ HR say they’re concerned that the salary increases have been taken for granted and that most people are expecting big bonuses too.

The outliers are allegedly Merrill Lynch and Citigroup, with some managing directors at the latter rumoured to be on salaries as high as £300k. “Citigroup’s bonus pool is under pressure – they’ve created a very high cost base for themselves and are out of line with banks like Goldman, where MDs are only on £130k,” says one executive search consultant.

Peter Hahn, a finance lecturer at Cass Business School and former MD at Citigroup, says salary increases are likely to backfire in the long term.

“Increasing salaries will show equity investors that banks are less profitable than they thought,” he says. “Longer term, it will make banks a less appealing investment and clarify the fact that their losses are borne by investors while the gains go to the employees.”

Goldman Sachs, Credit Suisse, the French houses and JP Morgan are among the big players which haven’t increased their salaries. Despite the obvious disadvantages of such a move, JP Morgan is understood to be planning an increase in February.