Financial technology recruiter The JM Group has just produced its quarterly insight into investment banking IT pay and it looks to have been a very good one – salary increases of up to 40% have been on the table.

The primary reason for these rapidly escalating salaries is the proliferation of counter offers for both permanent and contract roles, it says, with almost 90% of job offers being subject to counter offer. The result is that base salaries have been bumped up by 25-40%.

There’s still a very high level of demand for permanent investment banking IT roles, which has “exacerbated a serious candidate shortage, which is in turn pushing up salaries,” says Darrell Cameron-Webb, head of investment banking at the JM Group.

Mid to senior level candidates are accepting new positions with an average increase of 5-10k above what was on offer at the beginning of the year, suggests JM Group’s survey.

Here’s a breakdown of investment banking IT salaries as at Q2 2010 (base salary only):

Source: The JM Group