* Compensation costs rise 4 percent in 2010
* 40 pct of firms up bonuses
* More firms base pay on multiple performance measures
LONDON, Jan 31 (Reuters) - Pay at British asset managers is increasing faster than their revenues are recovering because they have to compete with a jump in banking salaries, a report said on Monday.
Compensation costs as a percentage of net revenues increased 4 percent in 2010, while bonuses rose at eight of the 22 firms quizzed by PwC's annual asset management report.
Managers are under pressure to retain talent as staff are lured away by banks, which have raised base salaries to compensate for reduced bonuses following widespread public anger with the sector after the financial crisis.
"Despite many firms spending more than the previous year on bonuses, base salaries are still being negotiated up," Tim Wright, PwC's remuneration director said.
"Ultimately asset management and banking share much of the same talent pool and new hires expect base salaries to be aligned," he said.
While traditional asset manager pay is on the rise, it is generally still well below that in the hedge fund sector, which has attracted mutual fund managers for years with the promise of higher annual fees and performance fees.
In particular, multi-billion-dollar payouts, as seen with the estimated $5 billion earned by John Paulson last year, are still largely the preserve of hedge funds. [ID:nN28212394]
The report also said the percentage of firms using more than one performance measure to determine long-term incentives rose to 28 percent in 2010, up from 4 percent the previous year. (Reporting by Tommy Wilkes; additional reporting by Laurence Fletcher; Editing by David Cowell) (For the Funds Hub blog: blogs.reuters.com/hedgehub) (For Global Investing: here)